As a former FBI Special Agent and a current forensic accounting professor, I have spent my career studying financial fraud. That is why I am so concerned about the Department of Justice’s (DOJ) recent lawsuit against Visa’s debit card business. By attacking Visa’s ability to charge fees that help fund its extensive fraud prevention measures, the DOJ is misunderstanding the market and putting millions of Americans at increased risk of financial fraud. Worst of all, the DOJ is setting a precedent in the payment industry for prioritizing cost-saving over customer security.
The small fees that Visa and other debit card processors charge fund essential security measures that protect consumers, businesses, and the entire financial system. Without these resources, Visa and its competitors would be significantly hamstrung in their ability to combat fraud.
No one has a gun to any business or consumers’ head to use Visa. The payments industry is highly competitive, with a number of debit card companies — not to mention fintech companies and digital wallets like Apple Pay and peer-to-peer payment services like Venmo and Zelle — all competing for business. Still, many Americans choose to use Visa—which, far from holding a monopoly, has just 60% of the debit card industry’s market share—because they prefer the convenience, safety, and security of its product offerings. That is why it is so concerning that the DOJ’s lawsuit sees the fees that Visa charges to keep its customers safe as subtractive, rather than additive, to the market. The decisions voluntarily made by consumers and businesses in the marketplace tell another story.
The reality is that financial fraud is everywhere. Financial fraud is a sophisticated, ever-evolving threat. Cybercriminals, fraud rings, and even state-sponsored actors constantly seek payment system vulnerabilities to exploit. Visa has invested billions in advanced fraud detection technologies, machine learning algorithms, and real-time transaction monitoring to proactively detect and prevent fraudulent transactions.
A large majority of consumers have received fraud alerts, via text message or email, regarding a suspicious charge to their bank account or credit card. These alerts are timely and a friendly reminder that financial fraud is everywhere. As a former FBI Special Agent and a current forensic accounting professor — teaching fraud trends and patterns — I currently emphasize the importance of educating the consumer. The DOJ and regulators should do the same; not spend time and effort to fine and penalize VISA.
Lower fees might provide short-term savings for merchants, but if they come at the cost of weakened security, consumers will ultimately pay a far greater price in the form of increased fraud. When fraud rises, banks and merchants pass the cost down to consumers through higher prices, increased security measures, and restricted access to financial services.
If the DOJ succeeds in pursuing this lawsuit, smaller merchants, which the DOJ claims to be protecting, would likely be the hardest hit, as they are less equipped to absorb fraud-related losses compared to larger corporations.
This DOJ lawsuit could also have national security implications because fraud is a major tool for organized crime and even terrorism financing. The ability to track, prevent, and mitigate financial fraud is a critical function in combating illicit activities worldwide. By undercutting the fees that help to support such efforts, the DOJ may inadvertently create new vulnerabilities for criminals to exploit.
Instead of targeting Visa’s fraud prevention funding, the DOJ and regulators should be working to educate consumers and enhance security measures across the payments industry. The priority should be protecting consumers from financial fraud, not mandating a change in business model that has proven effective in keeping everyone safe. The DOJ’s case against Visa risks undermining this system's success, and that is a risk we simply cannot afford to take.
