Sen. Richard Durbin, D-Ill., denounced a proposed settlement of claims that the interchange fees charged by MasterCard Worldwide, Visa Inc. and a number of issuing banks are unfair and violate provisions of the Sherman Antitrust Act. Durbin authored an amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that gave the Federal Reserve Board authority to cap debit interchange fees.
The more than $7 billion settlement proposal agreement was divulged in July 2012 by lawyers appointed by the Brooklyn Federal District Court to represent the nearly 7 million merchants in the class. If Federal Court Judge John Gleeson accepts the settlement, which merchant lawyers said will be submitted for the court's preliminary approval by Oct. 19, it would be the largest settlement in Sherman Antitrust history.
Nonetheless, some of the largest retailers and retail organizations in the country, organizations such as Wal-Mart Stores Inc. and The National Association of Convenience Stores, said they intend to opt out of the settlement.
In remarks published in the Congressional Record Aug. 2, 2012, to commemorate the two-year anniversary of the Dodd-Frank Act, Durbin said the interchange fee settlement was negotiated in secret by "attorneys representing a small number of merchants."
The senator urged merchants to reject the proposed settlement and stated it still allows Visa and MasterCard to unfairly set interchange fees and unwisely grants the card companies immunity from all interchange fee antitrust claims past and future. He also said proposed changes allowing merchants to surcharge and collectively negotiate interchange rates with card companies "will be ineffective in reining in Visa and MasterCard's unreasonable fees."
The senator said merchants should reject the settlement because it "gives Visa and MasterCard free rein to carry on their anti-competitive swipe fee system with no real constraints and no legal accountability to the millions of American businesses that are forced to pay their fees."
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