A group of retailers filed suit against the Federal Reserve yesterday, claiming the agency ignored debit card rules when it set the cap on fees banks may charge merchants for customers’ debit card transactions.
Plaintiffs in the suit—which include the National Retail Federation, Miller Oil, the National Association of Convenience Stores, the Food Marketing Institute and Boscov’s Department Store—say the Fed gave in to lobbyists’ pressure when it set the per-transaction cap at around 24 cents. The suit says the cap is an “unreasonable interpretation” that exceeds the Fed’s authority.
Prior to a cap, these fees averaged around 44 cents per transaction. The new rule, which is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, took effect in October.
“The merchants are extremely frustrated,” U.S. Public Interest Research Group Consumer Program Director Ed Mierzwinski said. “Our position in favor of reform has always been based on the fact that (shoppers) were subsidizing bank customer rewards because of a broken market.”
Frank Keating, CEO of the American Bankers Association, said in a statement that the retailers’ suit was nothing more than an attempt to gain “more profits from government price controls.” He also claims that retailers would not pass any savings on to customers.