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Monday, September 17, 2012

NRF will try to block settlement

The National Retail Federation was recently authorized by its Board of Directors to go to court to block the proposed $7.25 billion settlement of the antitrust lawsuit brought over card company interchange fees by national retailers.

The NRF is not a party to said lawsuit brought against MasterCard Worldwide and Visa Inc. And U.S. District Court Judge John Gleeson has not outlined how outside groups will be allowed to intervene or if the case qualifies as a class action.

Matthew Shay, NRF President and Chief Executive Officer, said the settlement not only doesn't curb the anti-competitive behavior of Visa and MasterCard, it also removes a legal remedy available to retailers now – and in the future – when they are faced with increases in interchange fees.

"The proposal is a lose-lose-lose for merchants, consumers and competition," Shay said. "We represent the nation's retailers, and that means not just today's retailers but tomorrow's as well. It is our duty to foster an environment that is supportive of young, new entrepreneurs who will create the Wal-Marts and Amazons and Main Street shops of the future. We can't stand by and allow their rights to be stripped away before they've even had a chance to start their businesses."

Shay pointed out that interchange fees are particularly burdensome for online retailers who are forced to pay higher card-not-present interchange rates. Additional allegations the NRF voiced include:

  • The proposed $7.25 billion settlement amounts to pennies on the dollar.
  • It allows future interchange fee increases that would let card companies quickly recover the cost of the settlement from the same retailers who sued over the fees.
  • The alleged antitrust behavior of MasterCard and Visa is not reformed by the settlement.
  • The settlement doesn't require the card companies to disclose fees or increase transparency.
  • The provision allowing merchants to surcharge customers who pay with credit cards is meaningless because merchants want to decrease costs for customers, not increase them, and for merchants who might want to surcharge, the restrictive nature of the provision makes it too difficult to do.
  • The settlement does not require the card companies to negotiate interchange fees with merchants in good faith.
end of article

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