CT Blue

One of the great mysteries of American politics, at least to me, is why the typical American small businessman is a Republican. For reasons that are unfathomable, they appear to believe that their interests are aligned with the corporations that own the Republican party, despite massive evidence that they are perceived by those corporations and by the Republican party as just another set of people to be sucked dry and left for dead. It is a tribute to the power of propaganda that these folks, who should be more perceptive than the mass of folks who don’t have the time, education or information to see through the scam, are in fact no better than the millions in seeing where their interests lie.

What brings this to mind? 

Via Matt Taibbi’s blog on Rolling Stone I was directed to this article in Bloomberg’s, which describes one method employed by banks to steal from the merchants who accept their credit cards. If this type of activity is widespread, and you just know it is, the scale of the theft probably makes the mortgage fraud scam small potatoes:

 Stephen and Cissy McComb say they managed their Italian eatery in Park City, Utah, for more than two decades without running afoul of security rules of Visa Inc. (V) and MasterCard Inc. (MA) — until they were accused of mishandling data and opening the door to $1.26 million in fraud.

The McCombs, who opened Cisero’s in 1985, are now in a legal fight with the bank that processed their credit charges and, indirectly, with what they say are card networks that change rules without notice, impose unfair one-sided contracts and allow the taking of money from merchants’ accounts with no proof of fault.

The couple sued, saying they didn’t break MasterCard and Visa rules, that there was no security lapse and that no acts of fraud were specifically claimed. The fraud was conjured from unexplained and unsupported data, they said in court papers filed in state court in Park City. Their suit may be the first court challenge to penalties under the card networks’ security procedures, said one of their lawyers, W. Stephen Cannon.

The card issuer and banks, acting through subsidiaries, impose fines on merchants for failing to adhere to rules purportedly designed to prevent fraud. Naturally, the merchants are not permitted to know the actual rules, nor are they allowed to contest the fines:

When the restaurant and US Bancorp entered their first contract, “arcane operating rules — over 1,000 pages in length — were not publicly available to merchants and did not contain provisions on data security,” the McCombs said in their complaint.

The fines are initially assessed against US Bancorp by Visa. US Bancorp simply passes them on to the merchant, never bothering to determine whether there is any factual or legal basis for them. 

Merchants already pay exorbitant fees to the banks for the privilege of enabling the banks to make even more exorbitant profits off of the customers of those merchants. The card issuers are in a position, and make no mistake, it might as well be a monopoly position, to impose an exorbitant sales tax on almost every transaction that takes place in this almost cashless society. But what fun is making obscene profits if you can’t add that little frisson that comes with a bit of mega thievery.

This story should lead to a massive government investigation, because only the government is in a position to determine the scale of this particular criminal enterprise.

Don’t hold your breath.