You're describing your state banking regulator. Also, like a bajillion federal banking regulators.
The article talks about credit card networks. I'm referring to banks. Banks are highly regulated, including with respect to account closures. Credit card networks are much less regulated.
If you want a non-court public venue to dispute your bank on something, anything, you have several such venues. Depending on your state, they can be quite toothsome.
Well, they're doing that but there's also a huge set of things whose legal status is "shmaybe?", and AnthonyMouse's point is that this is where the defaults matter. Currently, banks tend to merge that third category into "illegal" set. They could merge it into "legal" set instead, which would arguably be better for society.
I’m not defending porn as a grand corner of free speech but I don’t like banks deciding who can and cannot be paid.
The alternative that might work is charging businesses fees that vary according to the risk of their transactions being illegal. Which sounds good on paper, but also runs the risk of leaving the bank in the position of making a large amount of fees from illegal activity, which rarely goes over well in court. Better, perhaps, to have a unified fee schedule and just refuse any business that could be unprofitable from liability.
I think the banker would have a strong point here. They're not in a place where these are always easy calls to make - transactions don't come with an evil bit. The constraints placed on them don't leave them a lot of viable choices.
So bank should be held liable if they:
- do not collect evidence
- do not act on evidence
- if they act without evidence
The bank should face appropriate penalties for making misjudgments in both directions. For example, you should have a right to sue bank for refusing to provide a service. The court could judge whether bank had sufficient grounds to refuse to conduct the business with you.
The bank should also provide the evidence to law enforcement to trigger investigation into alleged illegal misconduct. If the judicial systems clears you, then again, you should be able to compel bank to provide the basic financial services.
There is regulation like that for individuals in EU. Banks are obliged by the law to provide basic financial services (bank account and identification services if I recall correctly) to EU residents as part of the European Single Market.
While offering a "Basic bank account" is a legal requirement, they have no requirement to offer that service to any specific person. In reality, it typically means that they're offered to people in debt, but not to people the bank doesn't like, american citizens, prisoners, etc.
From DIRECTIVE 2014/92/EU CHAPTER IV, Article 16:
2. Member States shall ensure that consumers legally resident in the Union, including consumers with no fixed address and asylum seekers, and consumers who are not granted a residence permit but whose expulsion is impossible for legal or factual reasons, have the right to open and use a payment account with basic features with credit institutions located in their territory. Such a right shall apply irrespective of the consumer’s place of residence.
Member States may, in full respect of the fundamental freedoms guaranteed by the Treaties, require consumers who wish to open a payment account with basic features in their territory to show a genuine interest in doing so.
Member States shall ensure that the exercise of the right is not made too difficult or burdensome for the consumer.
From: https://europa.eu/youreurope/citizens/consumers/financial-pr...
If you are legally resident in an EU country you are entitled to open a "basic payment account".
When banks can refuse you a basic payment account
You can be refused an account if you do not comply with EU rules on money laundering and terrorist financing.
In some EU countries, you may be refused a basic bank account if you already have a similar account with another bank in the same country.
If you're applying for a basic payment account outside the country where you live, banks in some EU countries may also want you to prove a genuine interest for doing so – for example if you live in one country but work in another.
You can imagine a similar model for payments. The bank can’t just indefinitely say “umm not sure”, it has to go one way or the other.
It seems reasonable to just make the fines small, and the bank can try to minimize them by having their policies match what a court will find for those which are taken to court.
If you don't want that, and you want the banks not to refuse any legal transactions, that's easy. They then don't refuse to process any transactions at all.
If you do want them to refuse illegal transactions, and they're allowed to refuse legal transactions, that makes it easy for the bank because then they just refuse anything marginal even if it's totally legitimate. This is what we have now. It's not a problem for the bank but it's a big problem for the people getting unjustly locked out.
Expecting the bank to process no illegal transactions and all legal transactions is an impossible burden, because nobody actually knows what that means. The meaning of a lot of laws isn't even settled until they get litigated in court and set a precedent. It would require the bank to be infallible, and know everything about everybody's business, because a mistake in either direction would incur penalties.
So which one do you want? (The first one actually looks pretty good when you consider the alternatives. Let the police be the police and the bank be the bank.)