The National Retail Federation today told the U.S. Supreme Court that
the debate over debit card swipe fees is "of staggering importance" and
asked the justices to review a ruling that left the Federal Reserve's
cap on the billions of transactions conducted each year at 21 cents
rather than reducing it to a lower level.
"There's so much at stake here for U.S. retailers and their customers
that we have no choice but to pursue this case as far as possible," NRF
Senior Vice President and General Counsel Mallory Duncan said. "When a
federal agency blatantly disregards the clear intent of legislation
passed by Congress and signed into law by the president, that's a
dispute that cannot be ignored."
petition asking the Supreme Court to consider the case was filed
today by NRF, the National Association of Convenience Stores, the Food
Marketing Institute, the National Restaurant Association, NRF member
Boscov's Department Store, and NACS member Miller Oil Co., all of whom
were plaintiffs in the original lawsuit.
Under the Dodd-Fank Consumer Protection and Wall Street Reform Act of
2010, the Federal Reserve was required to adopt regulations that would
result in debit swipe fees that were "reasonable and proportional" to
the actual cost of processing a transaction. Incremental costs of
authorizing, clearing and settling each transaction were allowed to be
considered but fixed costs were not. The Fed calculated the average
incremental cost at 4 cents per transaction and initially proposed a cap
no higher than 12 cents, but eventually settled on 21 cents after heavy
lobbying from the financial services industry.
While lower than the average of 45 cents before the cap was set, NRF
argued that the 21-cent figure included costs that went beyond those
allowed under the legislation and filed suit against the Fed in U.S.
District Court in 2011 along with other retail groups. In July 2013,
Judge Richard Leon ruled in NRF's favor and ordered the Fed to
recalculate the cap at a lower level, but the Fed appealed. This March,
the U.S. Court of Appeals for the District of Columbia overturned Leon's
ruling, citing "ambiguity" in the 2010 law and saying the Fed based the
cap on a "reasonable interpretation" of the measure.
"This case is of staggering importance," the petition filed today said.
"The economic burden of the (Fed's) error will be felt virtually every
time a consumer swipes a debit card."
The petition argued that the Circuit Court made a number of legal errors
and "bent over backward to find ambiguity" in Dodd-Frank while ignoring
the "text, structure and purpose" of the law.
NRF is the world's largest retail trade association, representing
discount and department stores, home goods and specialty stores, Main
Street merchants, grocers, wholesalers, chain restaurants and Internet
retailers from the United States and more than 45 countries. Retail is
the nation's largest private sector employer, supporting one in four
U.S. jobs - 42 million working Americans. Contributing $2.5 trillion to
annual GDP, retail is a daily barometer for the nation's economy. NRF's This
is Retail campaign highlights the industry's opportunities for
life-long careers, how retailers strengthen communities, and the
critical role that retail plays in driving innovation. www.nrf.com
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