Merchants Sue To Gauge Consumers
by Henry Meier
Remember those Congressional Hearings where Rockwellian small town merchants explained to Congress how evil banks and credit unions were making them pay exorbitant fees for the right to accept debit cards from their members? Remember those 7-11 petitions in which consumers were led to believe that if only merchants weren’t charged so much for debit cards, their slushies and day old hot dogs would be cheaper? Of course that was nonsense. But that didn’t stop Congress from capping debit card fees.
I wonder if those consumers would feel bamboozled or at least want an explanation if they were told that a group of merchants filed a suit in New York this week trying to overturn a law so that they can join other merchants who want to impose surcharges on customers using credit cards. Last year’s $7 billion antitrust settlement gave merchants the right to charge customers surcharges for using credit cards. But the settlement explicitly did not preempt state laws, including one in New York that prohibits merchant surcharges on credit card purchases. So, a group of small business owners is suing New York State claiming that the law is illegal (see Expressions Hair Design v. Schneiderman, 13-CV-3775). Perhaps they could start a petition, although I don’t know how many signatures they’d get.
To be fair, as someone who has been accused by members of his own family as being, shall I say, frugal with my funds, if I were a small business owner I wouldn’t want to pay interchange fees either. I also argued in a previous post that there is something incredibly cynical about anti-trust litigation involving interchange fees being settled by giving merchants the right to impose costs on the consumer. The real solution is for the merchants to stop running to the courts, continue to weigh the costs and benefits of accepting credit cards, and let the free market decide what the proper charge for using plastic should be. You may say I’m a dreamer, but I’m not the only one. I hope some day you’ll join us and the world will be as one.
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