NRF's Supreme Court Swipe-Fee Appeal
Details on retailer group's petition to review debit-card cap
Published in CSP Daily News
WASHINGTON -- The National Retail Federation (NRF) has taken the first step toward asking the U.S. Supreme Court to review a Circuit Court of Appeals ruling that cost retailers and consumers billions of dollars by leaving the Federal Reserve's cap on debit-card swipe fees at 21 cents rather than reducing it.
"This is a huge grab by the banks--through the Fed--in direct contradiction of what Congress passed," NRF senior vice president and general counsel Mallory Duncan said. "We have decided that the issues are sufficiently important that we ought to present them to the Supreme Court."
As reported in CSP Daily News, NRF and other plaintiffs--including the National Association of Convenience Stores (MACS)--in the original lawsuit asked the Supreme Court on Friday to grant an extension of the June 19 deadline for filing an appeal. If granted, the groups would have until July 21 to file briefs outlining the details of the appeal.
"By ignoring the plain command of the statute, the [Fed] has allowed [card] networks and banks to continue to reap unreasonable and excessive fees from merchants and consumers," attorney Shannen Coffin wrote in the request filed with the court. "The District Court understood the implications of the [Fed's] statutory misinterpretation but the Court of Appeals disregarded the plain letter of the statue."
Under the Durbin Amendment provisions of the Dodd-Frank Consumer Protection & Wall Street Reform Act of 2010, the Fed 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. The Fed calculated the average 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 better than the average of 45 cents before the cap was set, NRF argued that the figure was higher than what was sought by Congress 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.
A 2013 study found the 21-cent cap is saving merchants $8.5 billion a year, with more than two-thirds passed along to consumers, but that $12.5 billion could have been saved under a 12-cent cap.