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Consumers Lose Under the Durbin Amendment

University of Chicago Law School Analysis Finds Consumers Will Lose $22 Billion as a Result of the Durbin amendment

Nearly three years after the implementation of the Durbin amendment, consumers have yet to see the savings that retailers promised. Instead, they are paying the same or higher prices for goods and services and more in consumer banking costs.

An analysis by University of Chicago Law School economists David S. Evans, Howard Chang, and Steven Joyce entitled “The Impact of the U.S. Debit Card Interchange Fee Regulation on Consumer Welfare: An Event Study Analysis” quantifies just how much consumers are expected to lose, rather than gain, from The Durbin amendment. The paper analyzes stock prices to determine the impact to consumers from the Durbin Amendment.

The analysis finds that retailers gained a $7 billion yearly windfall starting in 2011 as a result of the Durbin amendment. At the same time, consumers began losing many money-saving banking benefits as a result of the Durbin amendment. These changes set off a series of consequences that ultimately will cause consumers to lose more than $22 billion.

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