The National Retail Federation told the U.S. Supreme Court that the debate over debit card swipe fees is “of staggering importance” and asked the justices to review a ruling that left the Federal Reserve’s cap on the billions of transactions conducted each year at 21 cents rather than reducing it to a lower level. A petition asking the Supreme Court to consider the case was filed today by NRF, the National Association of Convenience Stores, the Food Marketing Institute, the National Restaurant Association, NRF member Boscov’s Department Store, and NACS member Miller Oil Co., all of whom were plaintiffs in the original lawsuit. While lower than the average of 45 cents before the cap was set, NRF argued that the 21-cent figure included costs that went beyond those allowed under the legislation and filed suit against the Fed in U.S. District Court in 2011 along with other retail groups. The U.S. Court of Appeals for the District of Columbia overturned Leon’s ruling, citing “ambiguity” in the 2010 law and saying the Fed based the cap on a “reasonable interpretation” of the measure.
The National Retail Federation and the Retail Industry Leaders Association asked an appeals court to overturn a federal judge’s approval of a controversial lawsuit settlement over Visa and MasterCard’s credit card swipe fees, saying it was negotiated by only a handful of merchants and would do nothing to bring the fees under control. Both organizations filed notices of appeal with the 2nd U.S. Circuit Court of Appeals in New York earlier this year, and followed up today with a joint brief asking the court to overturn a December 13, 2013, ruling by U.S. District Court Judge John Gleeson. The district court approved the antitrust settlement even though NRF, RILA and other opponents argued for more than a year that it failed to reform the price-fixing system under which Visa and MasterCard set fees for credit cards issued by thousand of banks. Rather than lower the fees, the card companies proposed in the settlement that they be passed along to consumers as a surcharge. Major retailers rejected the surcharge proposal, saying it was the opposite of what they had sought.
The National Retail Federation issued the following statement from Senior Vice President and General Counsel Mallory Duncan in response to Visa and MasterCard forming a new cross-industry group focused on enhancing payment system security:
“We remain insistent that U.S. retailers’ customers be given the same protections as consumers in more than 80 countries who have both a chip and a PIN securing their credit and debit cards. There is no single solution to the complex issue of criminal hacking and we know PIN and Chip is just a bridge on the long road to a safer payment system, but it is an important step in the right direction.
“We appreciate being involved in meetings with other stakeholders such as the one hosted by Visa and MasterCard last week. While we certainly agree that speed is of the essence, we don’t believe that is an obstacle to introducing PIN and Chip cards since the technology is well established and the cards are widely used around the globe.
“Easy-to-forge signatures are a virtually worthless form of authentication. Insisting on chip-and-signature cards is like installing an alarm on the front door of a home while leaving the back door wide open. It doesn’t make sense when the technology exists to secure the entire house.”
The National Retail Federation today asked an appeals court to uphold a judge’s ruling that the Federal Reserve set its cap on debit card swipe fees far higher than intended by Congress and that the cap needs to be recalculated at a lower level. A three-judge panel of the U.S. Circuit Court of Appeals is scheduled to hold a hearing in Washington this morning on the Fed’s challenge of U.S. District Court Judge Richard Leon’s July ruling that the 21-cent cap that took effect in 2011 was too high. The ruling came in a lawsuit brought by NRF and other groups.
The National Retail Federation formally filed an appeal of a controversial antitrust lawsuit settlement covering credit card swipe fees, asking the 2nd U.S. Circuit Court of Appeals to overturn a lower court’s ruling. NRF is filing the appeal to overturn the flawed credit card swipe fee settlement, which accordingly does nothing to reform the price-fixing payments system that has let credit card swipe fees grown over the past decade and nothing to keep them from continuing to soar in the future. Instead of lowering fees, the card industry’s settlement proposes that merchants pass them along to consumers in the form of surcharges. That is absolutely the opposite of what retailers sought, and major retailers have soundly rejected surcharging. NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries.
The National Retail Federation issued the following statement in response to U.S. District Court Judge John Gleeson’s approval of a controversial antitrust lawsuit over credit card swipe fees:
“We are very disappointed that this deeply flawed settlement has been approved. It is not supported by the retail industry and would do nothing to reduce swipe fees or keep them from rising in the future. The settlement permanently ties the hands of thousands of businesses who wanted nothing to do with this misguided case, and a decision to approve it violates established law and common sense. We are reviewing the ruling and will take whatever steps are necessary to protect the rights of merchants and safeguard the pocketbooks of their customers.”
The National Retail Federation issued the following statement from Senior Vice President and General Counsel Mallory Duncan on U.S. District Judge Richard Leon’s decision that found that the Federal Reserve misapplied Congress’ intent when it implemented required swipe fees reforms:
“From the very beginning, retailers and restaurants knew the Federal Reserve Board of Governors had grossly misapplied the swipe fee law, also known as the Durbin Amendment. They failed to heed Congress’ call to set fee standards that were ‘reasonable’ and ‘proportional’ to the actual cost of a transaction. Instead, the Board manufactured a standard that was two to three times higher than the Fed staff recommended.
“As a result, small ticket transactions, such as those imposed on convenience stores and restaurants, skyrocketed under the misapplied law.
“Congress clearly told the Fed to introduce competition and transparency into the debit card marketplace by making multiple networks available, so as to reduce swipe fees for merchants and their customers. The Fed failed to do so, and the court rightly ruled against them as a result. Today’s decision is the first step in setting these initial wrongs right and will ensure that swipe fee reform is done correctly.”
The National Retail Federation told a congressional committee that federal regulations enacted last year potentially undermine a generation-old law guaranteeing women the right to obtain credit in their own names and need to be reconsidered. NRF has fought the income requirement as an example of the federal regulatory process gone awry, and believes the rules could undermine the Equal Credit Opportunity Act, a 1974 law giving women the right to obtain credit in their own name.
Numbers released by the Federal Reserve show debit card swipe fees collected by the nation’s largest banks have dropped an average of 24 cents in 4Q/11 since reform regulations took effect last fall. The National Retail Federation, however, expressed disappointment that the fees did not fall further. Swipe fees having fallen from an average 43 cents in 2009, NRF and other merchant groups filed a lawsuit against the Fed in federal court in November arguing that the agency set the cap nearly twice as high as what was allowed under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Under Dodd-Frank guidelines, the Fed initially determined that it costs banks an average 4 cents to process a debit transaction, and proposed that the fees be capped at between 7 and 12 cents per transaction. After intense lobbying by banks and the card industry, however, final regulations adopted in July 2011 set the cap at more than five times the actual cost – 21 cents plus 0.05 percent of the transaction and, in most cases, an additional 1 cent for fraud prevention.
The National Retail Federation urged the Federal Trade Commission to move cautiously in establishing regulations for mobile payments, and said any rules that are adopted should parallel those for the underlying form of payment and not be specific to the technology. The 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. NRF’s Retail Means Jobs campaign emphasizes the economic importance of retail and encourages policymakers to support a Jobs, Innovation and Consumer Value Agenda aimed at boosting economic growth and job creation.
In response to Bank of America’s announcement it will impose a $5 monthly fee on debit card users, The National Retail Federation issued a statement expressing displeasure. In a statement, targeting all banks set to implement this practice, the NRF disclosed “Every time Congress takes a step to protect consumers, the banks use it as an excuse to raise fees. We’ve seen it when Congress limited late fees and overdraft fees and now we’re seeing it with swipe fees. Just as merchants and consumers are about to get some relief, they’re doing it again. That doesn’t mean Congress shouldn’t pass consumer protection laws. It speaks more to the nature of the card industry than to whether swipe fee reform should have been passed.” In the United States, NRF represents an industry that includes more than 3.6 million establishments and which directly and indirectly accounts for 42 million jobs.
The National Retail Federation launched a major nationwide 60-day lobbying, grassroots and media campaign to ensure the federal law saving retailers and their customers more than $1 billion a month by lowering “swipe” fees banks charge to process debit card transactions takes effect in late July as scheduled. A provision in last year’s Wall Street reform bill will reduce the fees by an estimated 70 percent, saving about $14 billion a year that retailers plan to pass along to their customers through discounts or other benefits, but the credit card industry is spending millions to delay the reform. NRF’s multi-pronged campaign will include an intensive grassroots campaign mobilizing retailers from across the country through NRF’s members, members of its National Council of Chain Restaurants (NCCR) division, and state retail associations; a June fly-in with hundreds of business owners in Washington to meet with members of Congress and urge that the reforms go through as planned; an aggressive media relations campaign including media briefings and interviews with national and local news outlets, and nationwide placement of op-eds and letters to the editor; a nationwide print and radio advertising campaign including inside-the-beltway print and radio ads and hundreds of thousands of dollars in radio ads in key markets nationwide; leveraging social media and viral video to educate legislators and the public; and providing a platform for merchants and consumers to get involved through a new web resource center (www.nrf.com/swipefees).