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Major credit card issuers settle long-running lawsuit over fixing credit card fees

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No Elephants Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jul-14-12 04:12 AM
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Major credit card issuers settle long-running lawsuit over fixing credit card fees
The settlement amount was $6 billion, the largest in antitrust history.

While certainly significant, it is probably nowhere near what the banks and other issuers made by using price=fixing, a practice that is illegal under anti-trust laws.

Well, price=fixing is still technically illegal, but members of an industry conspire with each all the time. And, if caught, settle with private parties or with the government for a lot less than they reaped. So, there's no real down side whatever to breaking the law. Long gone are the days when businesses valued things like their respective reputations and public image above the bottom line.

On the other hand, if the issuers had settled with a government agency, the amount probably would have been a lot less, if history is any indicator.

Of course, retailers were already passing on to all of us whatever amounts they incurred in connection with credit cards by charging higher prices for the things we buy, but we will not be sharing in the settlement money. Nor will retail prices go down. However, we may now get hit with an extra fee now if we try to pay with a credit card instead of with a check or with cash.

This may make consumers keep more in their bank and checking accounts so they can pay without incurring a fee for using a credit card. If so, the banksters may well be the biggest winners in the lawsuit, despite the $6 billion settlement. Guess who the biggest losers in this case are! The usual suspects when it comes to losing, namely, the 99%.

Visa, MasterCard in $6B settlement over card fees

Jul 13, 11:51 PM EDT

Visa, MasterCard in $6B settlement over card fees

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NEW YORK (AP) -- Visa, MasterCard and major banks agreed to pay retailers at least $6 billion to settle a long-running lawsuit that alleged the card issuers conspired to fix the fees that stores pay to accept credit cards. As part of the settlement, announced late Friday, stores from Rite Aid to Kroger will be allowed to charge customers more if they pay using a credit card.

The pact, which is being called by lawyers involved in the case the largest antitrust settlement in U.S. history, is seen as a major victory for merchants that have long complained about the billions of dollars in so-called "swipe" or "interchange" fees that they pay to banks for purchases made using plastic. But at a time when shoppers increasingly are using credit and debit cards, merchants will face a dilemma: Whether to charge shoppers extra for using plastic, and if so, how to do so without angering them.

Marilyn Landis, who was last year's chairman of the National Small Business Association, said that the settlement is a victory for small businesses across the country because it could ultimately lead to banks lowering the fees they charge stores for customers' credit card purchases.

Landis, who owns Pittsburgh-based financial services firm Basic Business Concepts, said that would be a big relief. She's now paying 3.75 percent each time a customer pays with a credit card. If bank card companies reduce the fees they charge her to 2.75 percent, she would save a dollar on every $100 in sales.

(Friday news dump.)

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