Mixed response from retailers over credit card settlement
The major credit card companies -- Visa and Mastercard - as well as the big banks have agreed to pay more than $6 billion to retailers in a settlement over alleged price fixing of credit card fees.
Jeremy Hobson: And we'll start with what's being called the largest antitrust class action settlement in U.S. history. The major credit card companies -- Visa and Mastercard -- as well as the big banks have agreed to pay more than $6 billion to retailers. The retailers had argued that the credit companies conspired to fix the prices that retailers have to pay when people buy things with credit cards. The settlement would change the rules and allow retailers to charge you more if you use a credit card for your purchase.
Mallory Duncan is general counsel and senior vice president at the National Retail Federation, and he joins us now from Washington. Good morning.
Mallory Duncan: Good morning.
Hobson: How big of a deal is this thing?
Duncan: It's pretty big. You know, swipe fees amount to about $400 per household every year in hidden fees. We should all be outraged that we have to pay it, and this was an attempt to bring that down. But it looks like, at least on first read, it's going to fall really short.
Hobson: You don't think this is good for retailers?
Duncan: Potentially it's not good for retailers or for our customers. The banks have been charging a huge hidden swipe fee for the last several years -- amounts to tens of billions of dollars a year. This settlement provides some compensation for the overcharges in the past, and it portends to offer tools to try to bring those swipe fees down in the future. But frankly, after about an eight month hiatus, those fees are going to start going right back up again because the tools are ineffective.
Hobson: And you think that those fees are going to be passed on to consumers?
Duncan: The swipe fees -- consumers are paying them now. They are buried in the price of everything we all buy, and the goal here was to try to get those fees down. We can't have supposedly competitive banks all getting together, and through their associations, charging exactly the same fee to everybody without any negotiation. That's what the case was supposed to fix.
Hobson: Well then why did the retailers that were involved in this settlement agree to it?
Duncan: Well actually the agreement is between the attorneys -- the attorneys for the banks, the attorneys supposedly representing the retailers -- and you've already seen some of the retailers involved in the suit say, we're not happy with this. And from the calls and comments I've gotten over the weekend, they're going to be joined by more.
Hobson: Mallory Duncan of the National Retail Federation, thanks so much for talking to us.
Duncan: Sure happy to do it.