Organization news : NRF to Reject ‘One-Sided’ Credit Card Swipe Fee Settlement
WASHINGTON, May 21, 2013 – The National Retail Federation announced today that it will formally oppose a proposed settlement of a federal antitrust lawsuit over credit card swipe fees charged by Visa and MasterCard, and urged retailers to carefully consider their own decisions before next week’s deadline set by the court.
“The proposed settlement does nothing to bring swipe fees under control and would give Visa and MasterCard a legal blessing to continue their abuse of merchants and consumers indefinitely,” NRF Senior Vice President and General Counsel Mallory Duncan said. “No settlement at all would be better than this one-sided ‘agreement’ written by the card companies for the card companies that would tie retailers’ hands for decades to come.”
While many retailers have already filed paperwork with the U.S. District Court in Brooklyn, N.Y., opposing the settlement, many small retailers have yet to act because they lack the legal expertise and resources to fully assess the complicated proposal. Retailers who oppose the plan have until May 28 to say whether they will opt out of the money offered and accompanying restrictions on future legal action, object to proposed injunctive relief that comes with additional restrictions, or – as NRF plans – do both. Under the class action terms of the proposed agreement, retailers who do not opt out by the deadline will automatically be considered to have accepted the settlement and will give up the right to file future lawsuits over the fees and other restrictive rules.
NRF opposes the settlement because it fails to reform the price-fixing system under which Visa and MasterCard set the schedule of swipe fees followed by the thousands of banks that issue their credit cards, or to introduce transparency that would lead to competition to lower the fees. Rather than lowering the fees, the card companies have proposed that the fees be passed along to consumers in the form of a surcharge, even though most major retailers have rejected surcharges as the opposite of what they have sought during the years-long fight over swipe fees.
Retailers who do not opt out – and thereby become fully bound by the restrictions of the agreement – will be eligible for a share of $7.25 billion. But the figure amounts to less than three months’ worth of swipe fee charges, and the small retailers hit hardest by the fees would give up their rights for as little as a few hundred dollars.
The suit was brought in 2005 by 19 trade associations and individual retail companies, but a majority – including all six trade associations – rejected the settlement when it was proposed last summer. NRF, like most retailers, is not a party to the lawsuit, but has led the retail industry’s opposition to the settlement because NRF member companies would be dragged into its terms as part of the class action.
Averaging about 2 percent, swipe fees are a percentage of the transaction taken by banks each time a consumer swipes a credit card to pay for a purchase, and total about $30 billion a year nationwide. The fees have tripled over the past decade, and drive prices up for the average household by more than $250 per year.
As the world’s largest retail trade association and the voice of retail worldwide, NRF represents retailers of all types and sizes, including chain restaurants and industry partners, from the United States and more than 45 countries abroad. Retailers operate more than 3.6 million U.S. establishments that support one in four U.S. jobs – 42 million working Americans. Contributing $2.5 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s This is Retail campaign highlights the industry’s opportunities for life-long careers, how retailers strengthen communities at home and abroad, and the critical role that retail plays in driving innovation. www.nrf.com
Contact: J. Craig Shearman / (202) 626-8134 / firstname.lastname@example.org