WASHINGTON - Three industry associations, including Food Marketing Institute, filed a lawsuit in federal court here Tuesday saying the Federal Reserve failed to follow the requirements of last year's sweeping financial reforms when it set a cap on debit-card fees this year.
"FMI's members will suffer significant and irreparable monetary injury directly traceable to the Board's misconstruction of the statute," George Green, FMI general counsel, said in a statement. "The bottom line is that we are fighting back against a rule that ignores the clear language in the law and will put more money in the pockets of the big banks at the expense of retailers and their customers."
Also filing with FMI were National Retail Federation, National Association of Convenience Stores and two retailers: Boscov's Department Store, Reading, Pa., and Miller Oil Co., Norfolk, Va.
The groups say the Reserve Board's rules "have allowed big banks to continue charging unjustifiably high swipe fees" and are discouraging price competition among credit card networks, contrary to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The new regulations, which include capping debt-card fees at 21 cents per transaction plus 0.5% of the transaction cost and a 1-cent fraud-prevention fee (in most cases), took effect Oct. 1.
The lawsuit alleges that the Fed — under pressure from the banks and card industry — included costs in that calculation that were barred by the law. "Doing so has deprived merchants and their customers of the full extent of the swipe fee relief to which they were entitled," NRF said in a statement.