News Release

FOR IMMEDIATE RELEASE June 27, 2005

Contact Rebecca Reid at 202-342-2922

National Consumer Group Warns Latest Merchant Lawsuit
Against Credit Card Companies Poses Veiled Attempt to
Pass Additional Costs onto Consumer

ACEC National Chairperson Susan Molinari Urges Regulators and Consumers
To Beware of Merchant Movement to Lift Barrier to "Check Out Fees"

Washington, D.C. (June 27, 2005) – The merchant lawsuits filed over the last few weeks against credit card companies over the cost of accepting payment cards could come back to hit consumers at the check out counter, Susan Molinari, National Chairperson for Americans for Consumer Education and Competition (ACEC) charged today.

"Some retailers and class action lawyers have said their lawsuit is about lowering the fees they pay for accepting plastic, but it’s really an attempt to dramatically shift their costs onto the backs of consumers," stated Molinari. "At first glance, this might look like a war between retail and financial industry giants, but we need only look at what’s happening in Australia to see that regulating the interchange fee will lead to higher annual fees, higher prices at check out and weaker rewards programs for consumers. It was tried there and it failed."

The Reserve Bank of Australia set its standard on interchange fees in 2003, and drastically reduced the fees merchants pay to accept credit. DATAMONITOR performed an independent analysis of the credit card market in Australia today as a result of the interchange decision and among many conclusions, found this: "Taken collectively the direct impacts of the interchange reforms on consumers have been wholly negative. They are paying more in annual fees for credit cards and loyalty schemes, some retailers are now surcharging for credit card usage and they are not seeing lower prices at the checkout."

"As it stands now, more consumers are using debit and credit cards than cash to purchase goods and merchants who accept the credit cards for payment are benefiting from increased volume and higher sale amounts," said Molinari. "It requires a vast network to support hundreds of thousands of transactions a day. The process is working."

Molinari noted that concerned consumers can go to ACEC’s website, www.todaysmoneymatters.org, for a more in-depth explanation of interchange fee and surcharging or "check out fees." Americans for Consumer Education & Competition advocates for financial literacy and consumer rights initiatives. In addition, ACEC serves as a clearing-house for information on financial issues, as the organization monitors, tracks and provides analysis of financial legislation and litigation that has a direct impact on consumers.

"The bottom line is that consumers want efficiency and choice," said Molinari. "If they are using electronic forms of payment now more than cash, isn’t that illustrative of consumer preference? Australian consumers are now reeling from the effects of unwise regulatory intervention. Let’s protect American consumers from merchant-imposed check out fees and higher prices down the road."

FOR MORE INFORMATION, CONTACT:

Rebecca Reid
Executive Director
Americans for Consumer Education & Competition
202-342-2922
Cell: 410-212-3843

ACEC has the financial support of VISA USA and communicates with more than 15 thousand consumers interested in ACEC issues from financial literacy to budgeting for retirement to cardholder benefits and rights.