In Alfred Hitchcock’s movie classic “Dial M for Murder,” the crime at the center of the plot is hatched on a phone call. A half-century later, the universal availability of mobile devices and communications networks means that criminal acts are even more frequently plotted and carried out using electronic means. In investigating such crimes, does law enforcement hold responsible those companies that merely operate communications networks? Of course not. And yet that is exactly what the Department of Justice and other federal agencies are doing as they pursue disfavored – but legal – categories of merchants by targeting our nation’s payments systems.
The enforcement program has a name – “Operation Chokepoint” – and as more details of the program become public, more concerns are raised. The “chokepoint” in this operation is the nation’s payments infrastructure, the means by which merchants process nearly $5 trillion in consumer purchases in the U.S. each year. Federal law enforcers are targeting merchant categories like payday lenders, ammunition and tobacco sales, and telemarketers – but not merely by pursuing those merchants directly. Rather, Operation Chokepoint is flooding payments companies that provide processing service to those industries with subpoenas, civil investigative demands, and other burdensome and costly legal demands.
The theory behind this enforcement program has superficial logic: increase the legal and compliance costs of serving certain disfavored merchant categories, and payments companies will simply stop providing service to such merchants. And it’s working – payments companies across the country are cutting off service to categories of merchants that – although providing a legal service – are creating the potential for significant financial and reputational harm as law enforcement publicizes its activities. Thus far, payday lenders have been the most frequent target. Whatever the merits of payday lending – and there are valid arguments on both sides –it is legal in 36 states. And if payday lenders are today’s target– what category will be next and who makes that decision?
If you’re thinking this is harmful to the flow of commerce, you’re right.
![[rolleyes]](/xen/styles/default/xenforo/smilies.vb/042.gif "Roll Eyes [rolleyes]")
