August 22, 2017
Operation Choke Point, a controversial program developed to curtail fraud by denying some merchants access to payment processing, has been officially ended. Under President Obama, the U.S. Justice Department used payment processors to get at merchants in telemarketing, payday lending and other industries that were suspected of fraud. The practical effect of the initiative, according to some however, was that the administration was not just going after those perpetrating fraud, but trying to completely stomp out industries that were legal but disfavored. Merchants in many high-risk categories, many who use e- or m-commerce channels to sell their goods and services, may now find it easier to operate.
In a letter to U.S. Rep. Bob Goodlatte (R-Va.), chairman of the House Judiciary Committee, Assistant Attorney General Stephen Boyd called Operation Choke Point a “misguided initiative” and stated the Justice Department will no longer “discourage the provision of financial services to lawful industries.” Whether it will enable more merchants deemed “high risk” to get processing is unclear. But, federal pressure to comply with investigations is officially off financial institutions and payment providers.
“All of the Department’s bank investigations conducted as part of Operation Choke Point are now over, the initiative is no longer in effect, and it will not be undertaken again,” Boyd wrote in the letter. “The Department is committed to bringing enforcement actions only where warranted by the facts and the applicable law, without regard to political preferences.”