(THE INTERCEPT) David Dayen, August 23, 2017 — THE JUSTICE DEPARTMENT plans to terminate Operation Choke Point, an Obama-era law enforcement crackdown on scam consumer transactions that conservatives characterized as an attack on gun sellers and legal businesses. It concludes one of the more brazen misinformation efforts in recent political history — with misinformation triumphing.

The idea behind Operation Choke Point, initiated in 2013, was to prevent consumer fraud by limiting access to the financial system. Any transaction that requires a deduction from a bank account has to go through what’s called the Automatic Clearing House. Only banks with access to the payment system can facilitate those transactions.

Banks, of course, have certain responsibilities to flag suspicious activity, under the Bank Secrecy Act and anti-money laundering statutes. Banks must identify that their customer is legitimate, to ensure that they’re not implicated in a fraud scheme. So Operation Choke Point heightened scrutiny on banks who failed to raise concerns about questionable transactions on their networks. In presentations to banks, regulators and law enforcement highlighted business transactions with high rates of customer disputes. It was already the bank’s responsibility to report these; DOJ was just warning banks to be vigilant.

Choke Point was pretty effective. In 2014, Four Oaks Bank in North Carolina paid over $1 million in fines after giving access to a third-party payment processor to process dubious payments for online payday lenders, who removed funds from customer bank accounts without authorization. Four Oaks made $800,000 in fees from the third party, so the penalty actually cost them money, a rarity in banking cases.

This made the payday lending industry very nervous. Several lenders had recently popped up online, using tribal territories as a home base and asserting exemptions from state interest rate caps. By closely monitoring the banking system, the Justice Department was trying to limit the ability of these and other scam businesses to operate. Banks didn’t like this either, because they were making lots of money in fees from petty thieves to look the other way, and they didn’t want to have to file paperwork with government regulators calling out the fraud.

Source: More Trump Populism: DOJ Shuts Down an Operation That Was Successfully Combating Consumer Fraud