Vermont State Legislators Proposing an Assault on Consumers Who Pay With Debit, Credit, Charge

MONTPELIER, Vt., March 16 /PRNewswire/ -- In response to an amendment to S. 138 being introduced today in the Vermont Senate, the Electronic Payments Coalition has issued the attached one-page backgrounder on the proposed amendment, along with the following statement:

"This proposed amendment is an egregious assault on Vermont consumer protection laws. Shoppers at big box retailers would be left vulnerable to bait and switch pricing schemes, discriminated against at the register based on the card in their wallet, and forced to carry around cash at all times.  Moreover, the amendment language ignores the facts of the global electronic payments system that connects tens of thousands of card issuers, millions of merchants and billions of cardholders, with proposals that are simply unworkable.  This is a 'sweetheart deal' for big-box retailers who don't want to pay their fair share for a service that brings them higher profits, more customers and guaranteed payment – and want their customers to pick up the tab instead."

The Electronic Payments Coalition released today a document detailing the anti-consumer protection measures detailed in the proposed amendment.  This document follows this statement.

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The Vermont Legislature's proposed amendment on interchange would...

Leave Vermont consumers vulnerable and unprotected against deceptive, bait-and-switch advertising.

This interchange amendment would eliminate important consumer protections on how merchants are allowed to advertise their prices – restrictions that are in place expressly to protect consumers. This would allow big-box retailers to promise one low price, and then charge more – potentially a lot more – when the customer reaches the cash register. Consumers would be left unprotected, forced to pay the demanded price regardless of what was advertised – and giant retailers would profit unjustly from their dishonest schemes.

Leave consumers exposed to surprise check-out fees at the register, with no advance warning.

By removing the important consumer protections against deceptive advertising, this amendment would make it easier for merchants to impose surcharges, or check-out fees, at the register. Merchants are already allowed, both by card network contracts and by federal law, to offer cash discounts to their customers. Merchants, must, however, be clear as to the real pricing in advertising – otherwise, customers would effectively be surcharged at the register if they pay with a card.

Allow merchants to discriminate against certain cardholders.

Imagine getting to the front of a long line at a giant retail store, only to discover that the store doesn't accept your alma mater's credit card – or the card that donates a few cents of every purchase to your favorite charity or to your own rewards points. This legislation would allow giant retailers to discriminate against certain cardholders with no advance warning, leaving them stranded at the cash register without the freedom to choose whatever payment type they prefer.

Force consumers to carry cash.

This amendment would allow merchants to set minimum and maximum transaction amounts for all debit, credit and charge card transactions, permitting them to reject a customer's card. Consumers would be forced to carry cash in order to avoid being stranded with no way to pay for the check at the end of a meal, or a necessary purchase at a convenience store.

Favor the market power of big box retailers over mom and pop stores.

One of the amendment's provisions would prohibit card payment networks like Visa and MasterCard from setting "default" interchange rates. These default rates are the go-to rates between the tens of thousands of banks and credit unions that issue cards, and the thousands of banks and card processors that offer card acceptance services to merchants – absent any other arrangement. Without a default, each merchant bank would have to individually negotiate a separate interchange rate with each of tens of thousands of card issuers – clearly an advantage for a large retailer and its bank over a mom and pop store. For example, if a small business owner has a customer who wants to make a major purchase using a card from their local community bank – but that bank is not one with which a rate has been pre-arranged – then the purchase cannot take place, and the small business loses that customer. Default interchange rates have been repeatedly proven as not only perfectly legal, but actually essential to a functioning electronic payments system. This provision ignores the reality of that unbroken line of case law and experience to provide a sweetheart deal for big-box retailers, at the expense of mom and pop stores.

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About Electronic Payments Coalition

The Electronic Payments Coalition (EPC) includes credit unions, banks, and payment card networks that move electronic payments quickly and securely between millions of merchants and millions of consumers across the globe.  EPC's goal is to protect the value, innovation, convenience and competition in today's growing electronic payments system.  EPC educates policymakers, consumers, and the media on the system's role economic growth, and the importance of protecting consumer choice and stability for the continued growth of global commerce.  http://electronicpaymentscoalition.org/

SOURCE Electronic Payments Coalition