Saying that the debit card swipe fees set by the Federal Reserve were neither reasonable nor proportional, the National Retail Federation and other groups have sued the agency.
In the lawsuit, filed in U.S. District Court in Washington on Nov. 22, they alleged that the Fed failed to follow the intent of the Dodd-Frank bill, which mandated that the Fed regulate swipe fees.
The suit alleges that the Fed's rules "have allowed big banks to continue charging unjustifiably high swipe fees" that hurt retailers and their customers.
"Rather than following the law, it's almost as if the banks and the Fed were working hand-in-glove to block the genuine competition and common sense price reductions Congress directed," National Retail Federation Senior Vice President and General Counsel Mallory Duncan said in a statement. "The Fed's regulations have blunted the competition that would have made greater savings possible."
On June 29, the Fed issued its final rule that capped interchange fees at 21 cents a transaction, up from the original proposal of 12 cents, with a 1 cent fee for fraud prevention and a 5 basis point allowance for fraud costs.
Under the Durbin amendment to the Dodd-Frank bill, which mandated that the Fed regulate debit swipe fees, card issuers with assets of $10 billion were exempt from the caps. But several officials, including Federal Reserve Chairman Ben Bernanke and representatives of credit unions and small banks, said they doubted it would be possible to maintain a two-tiered system.
Retailers allege that the new fee structure allows card issuers to add up to 5 basis points to each transaction to recover a portion of fraud losses even though Dodd-Frank only lets them recover costs of fraud prevention.
Trish Wexler, a spokeswoman for the Electronic Payments Coalition, which represents card companies, credit unions and other issuers of debit cards, said in a statement that the lawsuit by retailers was "a matter of greed."
"Retailers won't be truly happy until they pay zero to accept cards. They don't want to pay anything for this system, " she said.
The retailers' lawsuit also alleges that the regulations have led to an increase in swipe fees for some small-ticket purchases.
The suit also states that the rules discourage competition among debit card networks.
The National Retail Federation filed the lawsuit on its own behalf and its National Council of Chain Restaurants division. Other plaintiffs include National Association of Convenience Stores and the Food Marketing Institute.
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