PGR investigates banks for unfair competition in the card market

Motivated by a representation made by the Brazilian Internet Association (Abranet), an entity that represents companies linked to payment machines, the deputy attorney general of the Republic, Luiz Augusto Santos Lima, opened an administrative procedure to investigate alleged unfair competition in the credit card market. credit from large banks.

The administrative procedure was initiated by the 3rd Chamber of Coordination and Review of Consumer and Economic Order of the Federal Public Ministry (MPF) and affects the Brazilian Federation of Banks (Febraban) and the banks Itaú, Santander, Bradesco and Nubank.

The PGR requested clarification on the topic from the Central Bank (BC) and the National Consumer Secretariat (Senacon), a body linked to the Ministry of Justice.

In the order, the deputy attorney general said that he made the decision “considering the relevance and seriousness of the issue and that, according to the representation, constitute facts that violate the economic order and consumer rights.”

Abranet and the big banks have been waging a “war” on the issue since last year. The discussion began with a debate about interest rates on revolving credit. The dispute between the institutions is due to interest-free installments.

Febraban says that the modality is subsidized by the revolving and, therefore, to lower the interest on the line, it would be necessary to limit the installments. Abranet claims that banks want to end installments for anti-competitive reasons.

Interest-free installments are one of the main sales mechanisms for retailers. Merchants, including online ones, give deadlines of up to 12 months to pay for interest-free purchases.

At the beginning of December last year, Febraban sued the Central Bank (BC) against four companies represented by Abranet: Stone, Market Pago, PagSeguro and PicPay. The Federation asked the BC to order the immediate interruption of the practices of “purchasing installments” and lending to consumers using digital wallets. In the representation, Febraban accused the companies of “practicing possible irregular and fictitious operations”, which it called “pirate interest-free installments”.

According to Febraban, the practice consists of an alleged scheme in which companies would be “charging remunerative interest from consumers, but posting it on the credit card bill as an interest-free installment plan”.

In a note sent to People’s Gazettethis Wednesday (31), Abranet said that the objective of the representation made to the PGR “is to find out whether the largest banks in the country are using their oligopoly position to prevent operations carried out by smaller competitors”.

According to the Association, “this action could constitute a violation of free market competition and harm to the economy”.

“Febraban has unfairly attacked products offered by our members, including Interest-Free Installments on credit cards, for a very simple reason: banks do not know how to face competition from new technology companies that have started to compete with them in the market. last years. Febraban’s defamatory campaign began last year during the Desenrola process in the National Congress. The project provided for – as it happened – a ceiling on banks charging high interest rates on revolving credit cards, which reached almost 450% per year. The banks claim that the rates were exorbitant, mainly due to the alleged default resulting from interest-free installment purchases […] Febraban’s false narrative has already been refuted by Congress, the federal government, the National Monetary Council and Senacon. In all cases, Febraban’s argument was rejected as false. Today, it was another blow for the big banks”, says the Association’s note.

Abranet also said that what Febraban called “pirated installments” would, in fact, be a technological tool supported by Brazilian legislation that “is made available to commercial establishments that allows the seller to calculate the amounts to be received for their sales, in accordance with the different payment methods used, payment terms and transactional costs involved”.

“Banks do not know how to face competition from new technology companies that have started to compete with them in the market in recent years. And now they will have to explain this stance at the PGR”, concluded Abranet.