This week marks the fourth anniversary of the “Durbin amendment,” a defective law directing the Federal Reserve to impose price-controls on debit interchange fees.

Slipped into the Dodd-Frank financial reform bill at the eleventh hour, the amendment has resulted in billions of dollars in revenue for merchants and not even a Slurpee of savings for consumers.

Big-box retailers like Target, Walgreens, Home Depot, and Walmart promised Congress they would pass their savings—about $8 billion annually—to consumers in the form of lower prices. From the beginning, critics of the law, including consumer groups, predicted that retailers would pocket these savings instead.

Four years later, the evidence against merchants continues to pile up.  In the two years following the Durbin amendment, research by the Electronic Payments Coalition found that prices at a wide range of retailers were rising instead of dropping.  Additionally, four years of consumer research by Phoenix Marketing International (PMI) has found that consumers continue to say they are not seeing savings. 

The most recent PMI survey of nearly 2,000 consumers found evidence that most shoppers have not seen prices drop. In each of the 15 categories measured by the survey, at least 92% of shoppers reported prices remained the same or, in many cases, increased. Supermarket shoppers were the most likely to a report a price increase, with 72% stating prices have increased and a mere two percent saying prices decreased over the past year. Similarly, a mere four percent of shoppers at department stores and home improvement stores have experienced a price decrease over the past year.

While these findings are not surprising, consumers have every right to feel cheated. In spite of their assurances, merchants simply pocketed $32 billion in savings the past four years. But, the lack of consumer savings is only half of the story.

The $8 billion per year merchants are siphoning away is money the financial services industry was using to fund low cost banking solutions. As described in studies by Todd Zywicki, GMU Foundation Professor of Law at George Mason University School of Law and Megan Milloy, Director of Financial Services Policy at the American Action Forum, the policy has resulted in a decrease in the availability of free checking accounts, higher checking account fees, higher minimum balance requirements and the elimination of debit rewards.

Additional evidence from a recent Federal Reserve Bank of Richmond Study also found that while big-box retailers are quick to blame interchange fees for higher costs, when interchange fees decreased as a result of the Durbin amendment, they didn’t pass savings along to consumers. According to the study, “few merchants are found to reduce prices or debit restrictions as debit costs decrease.”

Unfortunately, these changes hit members of society who can least afford it. By raising the cost of a checking account, Zywicki argues, the Durbin amendment deserves much of the blame for forcing an additional one million households to become “unbanked” since 2009. And according to Zywicki, the net result of the Durbin amendment is a transfer of roughly $1 to $3 billion each year from low-income households to large retailers.

Policies like the Durbin amendment pick winners and losers with little consideration for how they impact the broader system.  Study after study has reached the same conclusion: merchants have not passed along any savings from the Durbin amendment to consumers. And, according to PMI, consumers don’t believe they ever will. These are the unintended consequences of interfering with a functioning market—consumers are hurt the most. 

Richard Hunt is president and chief executive of the Consumer Bankers Association.