Retailers in 40 states -- New York, Florida, California and Texas are four oversized exceptions -– can add a surcharge as high as 4% on bills being paid by credit card as of Sunday. But even though there is widespread precedent for the practice at gas pumps and consumers are getting used to uncertain price points for everything from airline seats to online merchandise, most merchants appear reluctant to pass along the fee.
It’s all a result of the largest antitrust settlement in history, Reuters reports.
“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,” writes Atossa Araxia Abrahamian. “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.”
Merchants were also awarded the right to pass along the fee the credit card companies charge them to consumers in states where the practice is not illegal, but only to cover processing costs, which is usually in the range of 1.5% to 3% of the purchase. Other states banning the practice are Colorado, Connecticut, Kansas, Maine, Massachusetts and Oklahoma.
Consumer Action has published a downloadable PDF that spells out consumers’ rights and retailers’ responsibilities under the new order. Among the latter, it says, stores must provide “clear disclosure” of any fees at the store entrance, at the point of sale -- offline and online -- and on customer receipts.
“The disclosure on the receipt must list the amount of the checkout fee, the fact that the merchant is imposing the charge and that the fee is not greater than what it costs the retailer to accept credit and charge cards,” it says.
“Consumer awareness will be the strongest deterrent against widespread credit-card surcharges,’ opines Time’s Martha C. White. “… As consumers, we don’t take kindly to paying fees for stuff that used to be free.”
“Stores from the nation's largest retailer down to small businesses have lamented the agreement, claiming that it transferred the wrongdoings of credit card issuers to the consumer,” CNNMoney’s Emily Jane Fox reports.
The National Retail Federation and more than a dozen retailers have asked a judge to reject the proposed settlement. “In a brief submitted to a U.S. District Court judge in Brooklyn, N.Y.,” Fox reports, “the trade organization wrote that the new fees threaten a merchant's ability to keep prices low for customers.”
The NRF, which is representing retailers but is not itself a party to the suit, said at the time that it opposes the settlement “because it does little to address high fees charged in the past and nothing to prevent them from rising higher in the future.”
The fees cannot be assessed on customers using debit cards or the online PayPal service, but that’s little comfort to consumers given their devotion to credit. In fact, many Americans are more faithful to their credit cards than they are to their marriages, Credit.com’s Gerri Detweiler reports.
“According to Experian, the average time a credit card account remains open is approximately 129 months -- or 10.75 years,” Detweiler writes. “Contrast that with the fact that the U.S. Census Bureau reports that in 2009, first marriages that ended in divorce lasted a median of eight years for men and women overall.”
Loyalty to a card has its own set of benefits, it appears, sometimes including a better credit rating. But then those sexy “Earn up to 25,000 bonus Starpoints” come-ons show up on your browser and there’s no telling where you’re going to spend the night.
As for those oscillating online prices, well, they’ve got tools for that, including one from Citibank’s Citi Card, that will “even scour sites for lower prices after a purchase and help customers get a refund for any price difference,” Stephanie Clifford reports in the New York Times. And Hukkster.com alerts consumers when the price drops on a particular item they covet at their favorite online retailers.
“A lot of times the price will have a big difference on consumer behavior,” Larry S. Freed, CEO of ForeSee, tells Clifford.
In case you were wondering.