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ARLINGTON, Va. -- The effort to reform what the Food Marketing Institute calls "abusive" credit card company practices is now sweeping across America, the trade group said yesterday, with 17 bills introduced in 10 states this year targeting hidden interchange fees and other practices that cost consumers and retailers tens of billions of dollars a year.
Among the state moves cited by FMI yesterday:
-- State assemblies in Florida, Kansas, Nevada, New York, and Washington are considering bills to ban interchange fees on the sales tax portion of any retail transaction.
-- Proposed laws in Nebraska and Texas would require card companies and banks to fully disclose their operating rules and interchange fees. A bill introduced in Kentucky would extend the disclosure requirement to all charges and fees before consumers open a credit card account.
-- Legislation pending in Tennessee would limit interchange fees to 0.75 per transaction and in Washington to 1.5 percent of the transaction.
-- An Oklahoma bill would prohibit chargebacks, in which banks and card companies retain all the funds from transactions that exceed a preauthorized amount, leaving retailers without the products and the money the customer paid for them.
"Retailers welcome state scrutiny of credit-card company abuses, especially measures to require full disclosure and reduce interchange fees," said FMI president and c.e.o. Tim Hammonds in a statement. "For too long, Visa, MasterCard, and their card-issuing banks have fixed interchange fees under the cloak of secrecy. The predictable result: The cost of interchange now dwarfs that of all other credit card fees. State action against these outrageous practices reinforces the need for rigorous investigations by the U.S. Congress."
Congress began investigating this issue last year in hearings before the House Subcommittee on Trade and Commerce and the full Senate Judiciary Committee. The issue of excessive and hidden interchange fees was raised at recent hearings on abusive credit card company practices by the Senate Banking Committee and Permanent Subcommittee on Investigations. Both panels have indicated they plan to hold hearings on interchange fees later this year, according to FMI.
FMI is a leading member of the Merchants Payments Coalition, which is fighting for fair and transparent interchange fees. For more information about the proposed state laws, visit the listing at www.unfaircreditcardfees.com/uploads/State-by-State_Interchange_Activity....