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.
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.
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