News Release
For Consumers During Holiday Season - the Price Isn’t Always Right
Washington, D.C. (November 1, 2005) – Holiday spending, expected to increase by 6% this season from 2002, is prompting a national consumer advocate group, Americans for Consumer Education and Competition, to call on payment card companies to protect their consumer cardholders from two discriminating penalties imposed by merchants: 1) requirements for minimum purchases in order to use debit or credit and 2) a check out fee for consumers who pay with plastic.
"Holiday shopping begins earlier in the season every year and consumers who find credit and debit cards as their payment of choice need to be aware they could be charged more simply for paying with plastic,” said Susan Molinari, national chairperson for ACEC. “Card companies must take responsibility to educate their cardholders about unfair merchant practices designed to carve out extra revenue from consumers who take advantage of convenient electronic transactions."
Surcharging, often unnoticed by consumers, is a method practiced by some merchants to recoup fees they pay for the advantage of offering credit and debit options to their customers. Molinari noted that some states have “No Surcharge” laws on the books, while others do not. Only Minnesota allows surcharging up to five percent of the purchase price. Most credit card companies ban merchants from adding an extra fee onto the price of purchase for those consumers choosing to pay with a credit card.
"The fact is that merchants benefit from offering credit and debit options to consumers," Molinari continued. "Merchants attract a higher volume of customers and the credit and debit transactions generally are higher amounts. Retailers and consumers enjoy a secure electronic system that quickly processes transactions and merchants seem to think consumers ought to pay for their own goods and the retailer’s decision to provide the credit option. It’s simply unfair to the consumer and payment card companies need to join in and educate their cardholders now as we head into the holidays."
Another common practice of retailers is to require a minimum payment for consumers who wish to pay with credit. Consumers often wait in long lines only to find when they reach the register that they have to either leave the store without their purchase or go find another item whose price meets the credit requirement. Card users, contends Molinari, should not be singled out from those who pay with cash or write a check. Studies show check processing costs more than the processing of electronic transactions.
"This is the season to be jolly for both consumers and retailers," said Molinari. "American consumers fuel the economy every year during the holidays and right now we’re all getting ready to start that holiday shopping ritual. I get something in the mail from my credit card company nearly every week. As a consumer, I would like to hear from my credit card company about what rules exist that protect me and how I can avoid getting charged more when I use my debit and credit cards. Consumer fairness shouldn’t come once a year – it’s something consumers deserve year round."
Americans for Consumer Education & Competition advocates for financial literacy and consumer rights initiatives and enjoys the financial support of VISA USA. ACEC communicates with more than 25 thousand consumers interested in issues from financial literacy to budgeting for retirement to cardholder benefits and rights. 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.
Rebecca Reid
Executive Director
Americans for Consumer Education & Competition
Office: 202-342-2922 Cell: 410-212-3843