Litigation

They say lawyers are bad at math, but this is ridiculous

By Ted Frank

The New York Times reports on a potential settlement of an antitrust suit against credit-card companies over interchange fees. Let's leave aside for the moment that the article does not even mention the reality that the suit and the settlement will make consumers worse off by discouraging the use of credit cards and making rewards programs untenable. Here's what's jaw-dropping:

Under the terms of the proposed settlement, merchants could offer consumers an immediate discount or rebate for using a particular type of payment, a particular credit card network (Visa versus American Express), or a low-cost card within that network (a Visa debit card rather than a Visa credit card). ...

The settlement, however, does not allow merchants to levy a surcharge on credit and debit payments beyond the cost of the transaction, as some merchants had sought.

Yes, you read that right. The Department of Justice is allowing merchants to offer a discount to customers who use cash. But merchants cannot impose a surcharge to customers who use credit cards. That'll protect the consumers!

Full post as published by Point of Law on October 05, 2010 (boomark / email).