Durbin Weighs in on Swipe Fee Settlement - Legal News

Advertising Disclosure

Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Legal » Durbin Weighs in on Swipe Fee Settlement

Durbin Weighs in on Swipe Fee Settlement

Add to Favorites:
Durbin Weighs in on Swipe Fee Settlement

When Visa and MasterCard offered a $7.25 billion settlement package to retailers in their seven-year-long battle over interchange fees – also known as swipe fees – it was heralded as the largest-ever settlement in an antitrust case.

However, it looks like the settlement is unlikely to actually happen, as more and more retailers come out against the settlement, saying it doesn’t go far enough and will not actually fix anything going forward. Now Bloomberg News reports that Senator Richard Durbin, who got the Durbin Amendment put into the 2010 Dodd-Frank Act, limiting interchange fees on debit cards, has put in his two cents regarding the settlement.

Through his office, Durbin made it known that retailers who accept the settlement would put the final nail in the coffin for “the prospect of good legislation.” Durbin’s senior judiciary counsel, Dan Swanson, said that if the settlement is approved, “it will essentially be game over.”

Permanent Legal Immunity

Earlier this month, Durbin said that the settlement does nothing to change the anticompetitive fee-fixing that Visa and MasterCard do on behalf of their member banks. In fact, it gives Visa and MasterCard broad and permanent legal immunity to continue doing exactly that in the future.”

If retailers hope for Congress to enact legislation on their behalf, limiting interchange fees on credit cards the way they did on debit, they will need support from people like Senator Durbin, the Democratic majority whip from Illinois.

MasterCard and Visa obviously don’t want such legislation enacted, and would vastly prefer to have the case handled in the courts rather than the floor of Congress. “The legal system was and is the appropriate system to resolve a large and complex dispute between companies, not Washington,” said Trish Wexler, spokesperson for the Electronic Payments Coalition, which represents Visa and MasterCard.

The settlement offer was their attempt to put the case behind them, and if retailers’ acceptance of the offer causes Congress to stay away from creating new legislation around swipe fees, it could be a win-win situation for the credit card issuers.

Retailers Bite Back

In the wake of Durbin’s comments about the settlement, the National Retail Federation came out to say thanks, but no thanks, to interference from the Senator. Mallory Duncan, general counsel for the retail trade group, which includes retail giants Macy’s and Gap Inc. says that “Senator Durbin doesn’t have to gin up opposition to this settlement.” In an interview with Bloomberg News, Duncan said that an “overwhelming majority” of their members do not support the settlement.

Among those opposing the settlement is Wal-Mart, who told merchants that the settlement would tie their hands if they want to take further legal action against Visa and MasterCard and urged other merchants to say no to the settlement. Wal-Mart’s trade group, the Food Marketing Institute, which also included Target and Sears, did not take a position on the settlement, preferring to let their members speak for themselves. Target also said they do not support the settlement, as did the National Association of Convenience Stores, the National Community Pharmacists Association, and the National Grocers Association

Another No Vote

The latest retail group to oppose the settlement is the Cumberland Gulf Group, who said on Monday via a press release that their group “urges everyone in the merchant community, including those representing the class of merchants around the nation, to support a real solution to the problem caused by the card companies’ anticompetitive conduct.” Their “empathic opposition to the proposed settlement” is due to their belief that the settlement will not effect long-term change and will prevent further legal action against credit card issuers.

Ari Haseotes, CEO of Cumberland Farms, Inc. says that “The proposal offers no long-term relief for retailers or consumers from increasing swipe fees or from unfair credit card network rules. Moreover, this will not keep the card networks from continuing to raise swipe fees, which already cost retailers and consumers approximately $50 billion every year.”

Showdown in Brooklyn

The settlement is expected to be approved or rejected by U.S. District Judge John Gleeson in Brooklyn, New York, sometime this fall. Credit-Land will continue to keep readers up-to-date on the antitrust case as new developments occur.

Add to Favorites:

Related News:

No Early Appeal in Visa/MasterCard Suit Settlement
No Early Appeal in Visa/MasterCard Suit Settlement

Posted: December 12, 2012

A bid for an early appeal of the preliminary approval of Visa and MasterCard’s settlement offer in an antitrust suit was turned down this week. Continue reading
Amex Partners with Venus Williams at the US Open

Posted: August 23, 2017

American Express will be at the US Open again this year, and they will be rolling out some new experiences for cardholders including games and photo ops, along with access to the Card Member Club and American Express Radio Live. Continue reading
More EMV Enabled Debit Cards, Less Fraud

Posted: August 22, 2017

Last year there was an upswing in the number of chip-enabled debit cards rolled out, according to the 2017 Debit Issuer Study by Pulse, with an estimated 80% of cards in the United States having been outfitted with EMV technology. While ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Match Mile For Mile: We’ll match all the Miles you’ve earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
You could turn $150 into $300 with Cashback Match™. Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.
For Excellent, Good Credit
No Annual Fee. See WebBank/Fingerhut Credit Account Terms.
For Bad Credit