RETAILERS SUE FOR EVEN MORE PROFIT
Under the guise of helping consumers, Congress intervened on behalf of giant retailers to help them obtain an $8 billion annual windfall through unprecedented price caps on debit interchange fees. Not content with the billions in extra profits they have secured, giant retailers are now suing to increase their windfall.
Despite their promises, there is no evidence that merchants have lowered retail prices in any way, for anyone. It seems that they are pocketing the windfall and going back to the trough for more. They have steadfastly refused to accept any requirements that they pass this windfall through to their customers.
The Federal Reserve’s Rule
- The original, merchant favored proposal for interchange limitations would have slashed debit interchange fee revenues by approximately $12 billion annually.
- However, after receiving 11,500 public comments (more than 86 percent of which were opposed to that legislation), the Federal Reserve compromised with a slightly higher, but still government sanctioned, fee cap.
Retailers Looking to Pad Profits, Not Benefit Consumers with Lawsuit
- What do consumers stand to gain from the merchants’ lawsuit? Nothing. Despite their promises, there is no evidence that merchants have lowered retail prices in any way, for anyone. Instead they are pocketing the windfall and going back to the trough for more.
- Merchants willingly press for government interference and regulation when it benefits them but have steadfastly refused to accept any requirements to pass this windfall back to their customers.
- Harm to consumers, small businesses, and community banks and credit unions would be even more extensive.