Wednesday, January 30, 2013

Some Settlement!

Trey Smith

Retailers in 40 U.S. states can now charge up to 4 percent extra when consumers pay for goods and services with a credit card.

These so-called "checkout fees" went into effect January 27, and do not apply to debit card payments. The fees are illegal in California, New York, Texas and seven other states.

It is up to individual businesses to decide whether or not to add the fee. They also need to disclose it to consumers.

The surcharge is the result of the biggest anti-trust settlement in U.S. history. In 2005, a group of merchants claimed that MasterCard, Visa, and nine other companies including JP Morgan Chase & Co conspired to fix the fees that stores pay to accept credit card purchases.

After years of negotiations the case, which was in the U.S. District Court for the Eastern District of New York, settled. The credit card companies and banks agreed to pay $6 billion to the merchants who sued.

As part of the settlement, the merchants are allowed to charge customers a fee equal to the cost of accepting cards, typically 1.5 percent to 3 percent of the purchase price.
~ from Retailers May Add Surcharge in Credit Card Transactions by Atossa Araxia Abrahamian ~
Okay, let me see if I understand this. Merchants claimed that the major credit card companies were violating anti-trust law. If accurate, this means that these financial behemoths were gouging or ripping off a variety of business establishments. In the process of doing so, it is safe to assume that the behemoths got away with hundreds of billions or maybe even several trillion dollars in ill-gotten profits.

Possibly fearing that the judgment might go against them, these financial titans carved out an agreement which amounts to little more than a teeny slap on their pinkie fingers. It represents a miniscule amount of those ill-gotten gains (proving, of course, that crime DOES pay).

The major onus of the penalties will be borne by a group of individuals who were not a party to this case at all: consumers. Though we did not profit one iota from this allegedly illegal scheme, we are the ones who will be asked to pay for what amounts to the behemoths' fine. Put another way, we will pay the merchants the money they hope to recoup from being gouged by the credit card companies.

It would seem that this "settlement" has worked out great for all the parties involved in the suit. The side that allegedly gouged gets off with a minimal financial penalty and the allegedly gouged get to recoup their costs. And the one group that played no role whatsoever in this affair -- you and me -- gets clubbed over the head.

Yes, boys and girls, another clear example of American justice at work!

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