You are here
ARLINGTON, Va. -- The Food Marketing Institute (FMI) yesterday praised Congress for investigating what it called "abusive credit card company practices" at a hearing conducted by the House Government Affairs Permanent Subcommittee on Investigations.
The trade group argued that “consumers are blindsided by interest rate hikes” under a rule known as Universal Default.
“This is but one example of the hidden, egregious ways that Visa and MasterCard bilk consumers and businesses out of billions of dollars each year,” said FMI president and c.e.o. Tim Hammonds in a statement. “The most costly scheme by far is the interchange fee that card companies extract from each and every plastic transaction.”
These fees, averaging about 2 percent per payment, cost $36.3 billion in 2006, according to FMI. At the current rate of increase, interchange fees will cost nearly $43 billion in 2007 and cross the $50 billion mark in 2008, the trade group estimates.
Congress has already held three hearings on interchange fee issues, including one on July 19 by the House Judiciary Committee Antitrust Task Force, and two in 2006 by the full Senate Judiciary Committee and the House Commerce Subcommittee on Commerce, Trade, and Consumer Protection.
The U.S. Justice Department revealed at the 2007 hearing that it is investigating interchange fee antitrust issues. Meanwhile, merchants are pursuing more than 50 lawsuits against credit card companies and banks, charging that interchange fees are fixed in violation of the antitrust laws.
FMI is a leading member of the Merchants Payments Coalition, a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, online merchants, and other businesses that accept debit and credit cards. The coalition is fighting for a more competitive and transparent card system in which interchange fees are based on actual transaction costs.