This week, the Retail Litigation Center (RLC), which serves as the litigation arm of the Retail Industry Leaders Association (RILA), filed a brief amicus curiae with the United States Court of Appeals for the District of Columbia Circuit urging the Court to affirm a district court decision to invalidate the Durbin Amendment debit card swipe fee rule promulgated by the Board of Governors of the Federal Reserve (Board). Retailers argue that the Board’s swipe fee rule preserves the anti-competitive structure of the payments market in clear contravention of the Durbin Amendment itself. The brief highlights the failure of the Board’s rule to address the language, spirit and purpose of the Durbin Amendment and asks the DC Circuit to deny the appeal in the interest of consumers and the retail industry—which face higher costs and have little redress under the current Visa and Mastercard duopoly.
The challengers in the case, NACS, et al., v Board of Governors of the Federal Reserve System, raised concerns about the Board’s failure to issue a rule that creates the competition that the Durbin Amendment envisioned to lower interchange fees in the debit card market that the Durbin Amendment envisioned. The RLC brief analyzes the state of the market and the workings of the debit card transaction system to demonstrate how the rule failed to follow the intent of the statute and to create competition.
“The rule developed by the Board fails to follow the plain language of the statute and, therefore, fails to create competition,” said Deborah White, RLC President. “The flawed interpretation by the Board counting the PIN and Signature networks as separate debit networks, although controlled by the same dominant companies and limited in their application by market forces, does nothing for consumers or merchants. The Court should affirm the district court decision and instruct the Board to develop a rule that will restore competition in keeping with it Durbin Amendment.”
RILA and the RLC have long maintained that the payments market is broken and that the fundamental lack of transparency and competition hurts merchants and consumers alike. RILA lead the effort to enact the Durbin Amendment debit card swipe fee reforms and will continue to pursue legislative and regulatory efforts—including on credit card swipe fees—to reduce the burden placed on merchants by the Visa/Mastercard duopoly and the big banks, and bring competition to the broken electronic payments market.
From the brief filed with the United States Court of Appeals:
“In a thorough and well-reasoned opinion, the district court rejected the Board’s misguided approach. The district court correctly held that the Board’s Rule violated the plain language of the statute, its spirit, and its purpose.”
“The Rule’s perpetuation of the current duopolistic state of the market will do nothing to reduce fees or encourage competition. To the contrary, it will only solidify Visa’s and MasterCard’s stranglehold on the market for debit card acceptance – a result antithetical to the goal of the Durbin Amendment.”
“Not only did the Board choose the option that creates virtually no competition, it declined to adopt other available approaches that would have promoted competition.”
The complete brief, which can be found HERE, was written by Emery Celli Brinckerhoff & Abady, LLP attorneys Andrew G. Celli, Jr. and Ilann M. Maazel.
The Retail Litigation Center is a public policy organization that identifies and engages in legal proceedings which affect the retail industry. The RLC, whose members include some of the country’s largest retailers, was formed to provide courts with retail industry perspectives on significant legal issues, and highlight the potential industry-wide consequences of legal principles that may be determined in pending cases.
RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.###