Supreme Court Denies Cert in Debit Card Fee Dispute
Last week, the Supreme Court declined to review a challenge to Federal Reserve regulations that set a ceiling on debit card transaction fees. Retailers brought the suit, arguing that the Fed capped the transaction fees at too high an amount in light of the relevant statutory factors. The D.C. Circuit Court of Appeals disagreed and upheld the Federal Reserve’s regulation, a decision that the justices let stand by declining to consider the case.
In 2013, the average fee per debit transaction was 45 cents, which allowed debit card issuers to collect $16.33 billion in fees that year. Retailers have long opposed the charges, claiming the costs are ultimately borne by consumers. The Durbin Amendment to the Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd Frank Act) reflected these concerns and required the Federal Reserve to place a limit on the fees.
The Federal Reserve’s original proposal set a cap of just 12 cents per transaction. However, after receiving thousands of comments from members of the banking industry, the Federal Reserve issued its final rule in July 2011, which placed the cap at 21 cents per swipe. Seeking lower rates, retailers cried foul and headed to the courts.
The Supreme Court’s action last week ended this particular legal battle, though the feud between retailers and banks over debit card transaction fees will likely continue. For now, banking industry leaders are pleased to see the uncertainty of the Federal Reserve’s rules removed.
“Reasonable minds have prevailed,” said Richard Hunt, president and CEO of the Consumer Bankers Association. “This drawn-out fight should put on notice those members of Congress who insist upon interfering with the free market.”
- D.C. Circuit Opinion: NACS v. Bd. of Governors of Fed. Reserve Sys., 746 F.3d 474 (D.C. Cir. 2014), http://www.cadc.uscourts.gov/internet/opinions.nsf/FE9EDC4B5E2C6D9E85257CA2004FB19A/$file/13-5270-1484753.pdf, cert. denied, No. 13A1199 (U.S. Jan. 20, 2015).