Main Street Merchants and Consumer Groups: Reject the Sham Credit Card Settlement
Last week, the credit card industry announced its third attempt to finagle a litigation settlement that would cut off merchants’ rights to challenge the anticompetitive swipe fee system in court in exchange for largely meaningless “reforms.”
The response from Main Street merchants and consumer groups has been clear: this is a bad deal.
- Merchants Payments Coalition: “The courts have emphatically rejected these settlements twice but now the card industry is trying again to get legal protection while offering little in return to merchants. Under this proposal, Visa and Mastercard would get to keep fixing swipe fees while Main Street businesses and customers would pay the price.”
- NFIB: “This ‘settlement’ — like its previous version — is not good enough. As long as the current anti-competitive rate-setting regime remains in place, small businesses will continue to get gouged on swipe fees. The current system, where Visa and Mastercard set the interchange fee that every small business pays to every bank, amounts to price fixing and must be reformed to allow the free market and real competition to set the interchange rates.”
- American Economic Liberties Project: “This settlement is little more than window dressing and won’t reverse the alleged illegal and anticompetitive practices of this duopoly.”
- National Association of Convenience Stores: “Approving this settlement would contradict the ruling that Judge Brodie made just last year and would declare open season for the credit card companies to hit merchants and their customers with more price increases.”
- National Retail Federation: “This is the third attempt to settle this case and the card industry either just doesn’t get it or just doesn’t care. Once again, this proposal is all window dressing and no substance. The reduction in swipe fees doesn’t begin to go far enough, and the change in the honor-all-cards rule would accomplish nothing.”
- National Grocers Association: “Independent grocers, operating on net margins of less than 2%, have been hit hardest by rising swipe fees, which grow faster than inflation and cost consumers and businesses over $100 billion annually. This settlement leaves Visa and Mastercard’s price-fixing structure fully intact, to the detriment of Main Street businesses and Americans everywhere.”
How could such a lopsided proposed settlement happen after merchants have won at every stage of the case, even beating Visa and Mastercard’s motions for summary judgment?
Unfortunately, a small group of lawyers that most merchants didn’t want convinced the court to let them bargain for everyone — and not let any merchants or merchant groups decide to go another way or have other lawyers argue for them.
Without talking to merchant groups, those lawyers cut a bad deal … again.
The court has already rejected two settlements in the case for shortcomings that are still clear in this proposed settlement. The court should reject it again.
It’s clear we need legislation to deal with this problem.
COMPETITION IS BETTER FOR EVERYONE
IT'S TIME TO PASS THE CREDIT CARD COMPETITION ACT