12/4/2011
A lawsuit was filed by a number of retail groups in federal court Tuesday, claiming the Federal Reserve failed to abide by the requirements of a financial reform statute when it set the cap on debit card swipe fees.
The National Association of Convenience Stores, the food Marketing Institute, the National Retail Federation and two retailers said that the policy allowed big banks to keep on charging “unjustifiably” high swipe fees and “discouraged price competition among credit card networks.”
Mallory Duncan, the senior vice president of NRF, said, “The Federal Reserve was required by law to come up with swipe fees that were ‘reasonable’ and ‘proportional’ but what we got were neither.”
The lawsuit alleged that the Fed, which retail groups claim is under pressure from the banks and the credit card industry, integrated costs that were prohibited by the law, denying merchants and their customers some of the relief provided under the law.
Duncan also said, “The Fed allowed themselves to be influenced by the very banks they are supposed to regulate and raised the originally proposed cap to include expenses the law said were not allowed. In doing so, they literally gave away half the savings that could have been seen by merchants and their customers. We want them to go back and follow the law this time.”
The lawsuit also alleged that the new rules, which took effect Oct. 1, led to the increase in swipe fees for a number of small-ticket purchases.
On the other hand, the legal action was criticized by the electronic payments industry. Trish Wexler, the Electronic Payments Coalition spokeswoman, in an email, said, “Apparently, retailers aren’t happy with their $8 billion windfall — even though they’re pocketing all of it, with no evidence of passing any of it back to their customers.”
