NRF Appeals "Flawed" Swipe Fee Settlement
Retailers hope to overturn ruling on the grounds it does not have retailers’ and consumers’ interests at heart
Following U.S. District Judge John Gleeson’s approval of the $5.7 billion settlement between retail groups and Visa and MasterCard regarding swipe fees, the National Retail Federation (NRF) hinted that it would be continuing the fight to protect merchants. Now, it’s official. Three weeks later, on Thursday, Jan. 2, 2014, the NRF announced it is appealing the recent settlement in the hopes that the 2nd U.S. Circuit Court of Appeals will overturn a lower court’s ruling.
One of the primary reasons the NRF filed an appeal is because of its concern that the settlement does nothing to protect retailers and their consumers from volatile credit card swipe fees. As NRF senior VP Mallory Duncan says, “The settlement does nothing to reform the price-fixing payments system that has let credit card swipe fees skyrocket 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.”
Following the ruling three weeks ago, some of the nation’s largest retailers including Walmart, Amazon.com, and Target voiced opposition to it, and nearly 8,000 retailers and merchants rejected the proposal once they learned of the terms. Not only could some of the releases of the settlement limit the industry’s ability to innovate in the future, but passing fees onto customers in the form of surcharging is something the industry, of course, would like to avoid in order to respect and maintain a positive retailer-consumer relationship. The current settlement, as Duncan points out, is “with nine individual retailers whose views are not representative of the collective industry.”
Duncan goes on to say that the settlement was primarily a means to benefit others besides the retail industry and its customers. “The only people pleased with this settlement are Visa and MasterCard, because it means they can continue collecting tens of billions of dollars in hidden fees, the class action lawyers who stand to collect half a billion dollars in fees without fixing the problem, and a lower court, which has cleared a time consuming case off its docket, but has done a serious disservice to merchants and the public in the process.”
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