“The settlement still does virtually nothing to protect retailers or their customers from the abuses of the card industry, and it attempts to silence any objections for years to come,” says NRF.
The National Retail Federation (NRF) said a revised antitrust settlement filed in federal court Friday, Oct. 19, scarcely begins to address retailers’ concerns about credit card swipe fees charged by Visa and MasterCard that cost consumers close to $30 billion a year.
“The proposal put on the table this summer was beyond tweaking, and the update presented today proves that fact. It remains manifestly unfair,” said NRF Senior Vice President and General Counsel Mallory Duncan. “The settlement still does virtually nothing to protect retailers or their customers from the abuses of the card industry, and it attempts to silence any objections for years to come. Retailers would rather take their chances in court than accept this one-sided swindle written by the card industry for the card industry.”
“It should prove very significant to the court that the majority of the plaintiffs in this case have repudiated the settlement, and that includes half a dozen national trade associations representing thousands of merchants,” Duncan said. “The lawyers and handful of retailers who support the settlement do not represent the retail industry.”
Lawyers representing 13 individual retailers and six trade associations ranging from convenience stores to restaurants this summer announced a $7.25 billion proposed settlement of a lawsuit filed against Visa and MasterCard in 2005. But four of the individual companies and all six of the trade associations have rejected the proposal since then.
A revised version of the settlement was filed in U.S. District Court in Brooklyn today, and opponents are expected to have 30 days to voice their objections to the deal.
NRF is not a party to the lawsuit, but represents thousands of retailers who would be affected if the case is approved as a class action and has been authorized by its Board of Directors to go to court to block the settlement.
NRF opposes the settlement because it does little to address high fees charged in the past and nothing to prevent them from rising higher in the future. The $7.25 billion figure represents less than three months’ worth of swipe fee collections despite the eight-year period of the lawsuit, and the settlement fails to reform the cartel-like system where Visa and MasterCard set a rigid schedule of swipe fees all banks agree to follow while refusing to negotiate with merchants. The proposal does nothing to disclose the hidden fees or otherwise create transparency that would encourage competition. And retailers would face a long-term ban on future lawsuits over swipe fees, effectively allowing card industry practices to continue unchallenged.
Swipe fees are a hidden charge banks collect each time a Visa or MasterCard is swiped to pay for a purchase. Combined credit and debit card swipe fees tripled over the past decade to about $50 billion a year—driving up prices an estimated $427 for the average household—before debit swipe was capped by the Federal Reserve last year. Credit card swipe remains unregulated and averages about 2% of each transaction, amounting to about $30 billion a year, or $250 per household.