By Vicki Needham - 08/18/14 08:08 PM EDT
Several retail and merchants groups on Monday asked the U.S. Supreme Court to review a March ruling that upheld the Federal Reserve’s debit card swipe fee rules.
The groups — the National Association of Convenience Stores (NACS), the Food Marketing Institute (FMI), the National Restaurant Association, the National Retail Federation (NRF), Boscov’s department stores and Miller Oil Co. — filed a petition asking the justices to examine the decision that left the swipe fee cap at 21 cents per transaction, rather than lowering it.
“There’s so much at stake here for U.S. retailers and their customers that we have no choice but to pursue this case as far as possible,” said Mallory Duncan, the NRF’s senior vice president and general counsel.
“When a federal agency blatantly disregards the clear intent of legislation passed by Congress and signed into law by the president, that’s a dispute that cannot be ignored."
Under Dodd-Frank, the Fed calculated the average incremental cost at 4 cents per transaction and initially proposed a cap no higher than 12 cents, but eventually decided on 21 cents.
"Unfortunately, the Fed overrode the language of the law and blunted the positive impact of reform. We need the Supreme Court to decide this case so that American merchants and their customers stop paying billions of dollars more than they should per year to the big banks," said NACS President and CEO Henry Armour.
The NRF has argued that the 21-cent figure included costs that went beyond those allowed under the legislation and filed suit against the Fed in U.S. District Court in 2011, along with other retail groups.
All of the groups filing the petition were plaintiffs in the original lawsuit.
In July 2013, Judge Richard Leon ruled in the NRF’s favor and ordered the Fed to recalculate the cap at a lower level, but the Fed appealed.
In March, the U.S. Court of Appeals for the District of Columbia overturned Leon’s ruling, citing “ambiguity” in the 2010 law and saying the Fed based the cap on a “reasonable interpretation” of the measure.
“Congress originally passed a law that was designed to lower swipe fees paid by customers and merchants, but the final Federal Reserve rule disregarded the legislative language and actually raised rates on many transactions," said FMI President and CEO Leslie Sarasin.
"Our food retailers and wholesalers consistently serve their customers based on a simple merchandising strategy — low markups and high volume – and these excessive swipe fees exceed the industry’s one-percent net profit on shoppers’ orders."