Fashion Law: Retailers Sue the Federal Reserve Over Swipe Fees

In Fashion Law by FASHIONENTLAW™

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Operating a business can be quite a challenge. Dealing with legal requirements, fees etc. is no easy feat. Add to the mix the challenge of staying competitive and increased fees as a retailer if you want o provide diverse methods of payment for your customers. That is essentially what the litigation  below is about. Read on.


“The Federal Reserve was sued by retailer groups over new regulations governing so-called swipe fees, claiming the Fed disregarded the law when deciding how much banks can charge merchants for debit-card transactions.

The groups, in a lawsuit filed today in U.S. District Court in Washington, said retail merchants will be “substantially harmed” by the fees the Fed set under the Durbin Amendment, a provision of the Dodd-Frank legislation passed last year. The rule went into effect on Oct. 1.

“The Board’s final rule permits banks to recover significantly more costs than permitted by the plain language of the Durbin Amendment and deprives plaintiffs of the benefits of the statute’s anti-exclusivity provisions,” the retailers argued in their complaint.

The case was filed by the National Retail Federation, the Food Marketing Institute and NACS, formerly the National Association of Convenience Stores. Oil Miller Co., a residential heating and air company based in Norfolk, Virginia, and Boscov’s Department Store LLC, based in Reading, Pennsylvania, also joined the complaint.

Susan Stawick, a spokeswoman for the Fed, declined to comment on the suit.

Electronic-Payment Networks

Swipe, or interchange, fees are set by Visa Inc. (V) and MasterCard Inc. (MA), the biggest electronic-payment networks, which collect the money and remit it to card-issuing member banks.

Dodd-Frank, the regulatory overhaul enacted in July 2010, required the Fed to ensure fees charged for debit-card purchases were “reasonable and proportional” to the cost of processing transactions.

The 21-cent cap approved by the central bank on June 29 reflected a pullback from a 12-cent limit it proposed in December. Retailers previously had been paying an average of 44 cents per transaction.

Retail and merchant groups lobbied to defend the reduction in the fees. A competing banking-industry campaign to delay the rules failed when the Senate rejected a proposed amendment in June.

In the lawsuit, the retailers allege the Fed declined to determine the incremental costs associated with a debit transaction and instead “invented” a category of costs not mentioned in the statute, giving the agency unfettered discretion in setting the 21-cent cap. . .”

Bloomberg has the full story.


Uduak Oduok (Ms. Uduak) is a Partner and Co-Founder of Ebitu Law Group, P.C. where she handles her firm’s fashion and entertainment law practice areas. Ms. Uduak has litigated a wide variety of cases in California courts. She has also handled a variety of entertainment deals for clients including network television and licensing deals. Her work and contributions to the creative industry has been recognized by numerous organizations including the National Bar Association, and featured in prestigious legal publications in the USA: ABA Journal and The California Lawyer Magazine. She is also the author of Fashionentlaw™ and also has over two decades combined hands on industry experience in the creative industry which includes modeling, retail, fashion production, public relations, digital media, journalism and publishing. For further inquiries or if you are seeking legal representation, please email ( You may also follow her on twitter at @uduaklaw

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