VERMONT ENACTS FIRST STATE LAW PROTECTING PAYMENT CARD MERCHANTS
The Vermont legislature recently passed Senate Bill 138 enacting the Prevention of Credit Card Company Unfair Business Practices statute. The statute prohibits any “electronic payment system” from imposing any requirement, condition, penalty or fine in a contract with a Vermont merchant inhibiting the merchant from:
(1) Providing a discount for payment through alternative methods;
(2) Setting a minimum dollar value; or
(3) Deciding to accept an electronic payment system at one or more of its locations, but not at others.
The law takes effect January 1, 2011.
Several measures regulating merchant discounts and fees by credit card networks have been proposed in Congress this session. Most notably, Senator Dick Durbin offered an amendment to the Senate’s regulatory reform bill that was approved by the Senate. A revised version of Durbin’s amendment was included in the final bill passed by the Senate on May 20, 2010. Section 1079 of the approved Senate bill (which is an amended version of the bill passed by the House, H.R. 4173) would (i) regulate interchange transaction fees for electronic debit transactions and (ii) prohibit (a) restrictions on merchant discounts and (b) transaction minimums or maximums. Section 1079 does not address the relationship between federal and state laws. The House and Senate must resolve differences in their bills before the regulatory reform legislation becomes law.
Congressional interest in these issues is not new. The Credit Card Accountability Responsibility and Disclosure Act of 2009 required the Comptroller General to conduct a study of interchange fees and submit a report to the Senate Committee on Banking, Housing and Urban Affairs and the House of Representatives Committee on Financial Services with findings, conclusions and recommendations. The report “Credit Cards: Rising Interchange Fees Have Increased Costs for Merchants, but Options for Reducing Fees Pose Challenges,” GAO-10-45, was published November 19, 2009.
- Margaret Stolar and
FED LAUNCHES WEBSITE FOR CREDIT CARD AGREEMENT DATABASE
As required by Section 204 of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), the Federal Reserve Board (Board) has established on its publicly available Internet site a central repository of the consumer credit card agreements received from creditors pursuant to Section 204. Consumer credit card agreements from more than 300 credit card issuers are available in the searchable database. The database is intended to help consumers compare credit card agreements and find a card that best suits their personal finance needs. The database ( www.federalreserve.gov/creditcard) will be updated quarterly; the next submission deadline is August 2, 2010.
- Judy Scheiderer
BOARD ISSUES REPORTS ON SMALL BUSINESS CREDIT CARDS AND REDUCTION OF CONSUMER CREDIT LIMITS
The Board has submitted two reports to Congress as required by the CARD Act. Section 506 required the Board to conduct a review of the use of credit cards by businesses with no more than 50 employees and of the credit card market for small businesses. Section 505 required the Board to study reductions of consumer credit limits based on certain information as to experience or transactions of the consumer. See www.federalreserve.gov/pubs/reports_other.htm.
- Judy Scheiderer and