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RAPAPORT... The National Retail Federation (NRF) opposed a settlement of a federal antitrust lawsuit over credit card swipe fees charged by Visa and MasterCard, and the organization urged retailers to carefully consider their own decisions before next week’s deadline set by the court. DowJones Newswires reported that Walmart, Costco Wholesale and Starbucks, just to name a few, have also opted out of the settlement. “The proposed settlement does nothing to bring swipe fees under control and would give Visa and MasterCard a legal blessing to continue their abuse of merchants and consumers indefinitely,” said NRF's senior vice president and general counsel, Mallory Duncan. “No settlement at all would be better than this one-sided ‘agreement’ written by the card companies for the card companies that would tie retailers’ hands for decades to come.” The NRF stated that many retailers have filed paperwork with the U.S. District Court in Brooklyn stating their opposition to the settlement, yet it is the smaller retailers who have not weighed in given widespread lack of legal expertise and resources. Retailers who oppose the settlement have until May 28 to say whether they will opt out of the money offered and accompanying restrictions on future legal action, object to proposed injunctive relief that comes with additional restrictions or both. Under the class action terms of the proposed agreement, retailers who do not opt out by the deadline will automatically be considered to have accepted the settlement and will give up the right to file future lawsuits over the fees and other restrictive rules, according to the NRF. NRF opposes the settlement because it fails to reform the price-fixing system under which Visa and MasterCard set the schedule of swipe fees followed by the thousands of banks that issue their credit cards, or to introduce transparency that would lead to competition to lower the fees. The NRF stated that rather than lowering the fees, the card companies have proposed the fees be passed along to consumers in the form of a surcharge, even though most major retailers have rejected surcharges as the opposite of what they have sought during the years-long fight over swipe fees. Retailers who do not opt out will be eligible for a share of the $7.25 billion settlement. But the figure amounts to less than three months’ worth of swipe fee charges, concluded the NRF, and the small retailers hit hardest by the fees would give up their rights for as little as a few hundred dollars. The suit was brought in 2005 by 19 trade associations and individual retail companies, but a majority – including all six trade associations – rejected the settlement when it was proposed in 2012. The NRF is not a party to the lawsuit, but has led the retail industry’s opposition to the settlement because its member companies would be dragged into its terms as part of the class action. Averaging about 2 percent, swipe fees are a percentage of the transaction taken by banks each time a consumer swipes a credit card to pay for a purchase, and total about $30 billion a year nationwide. The fees have tripled over the past decade and drive prices up for the average household by more than $250 per year.
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