“Use of debit cards to pay unemployment benefits draws criticism” [via PrimeBuzz.com]

“The state began phasing in the use of debit cards on July 9. So far, every claim for unemployment benefits that is processed on Wednesday or Thursday receives the debit card, Olivo said. Claims processed other days still get either a check or direct deposit.”

Click here to read more

 

Premier Shopping Mall Agrees with WayTooHigh.com

I have long advocated against and drawn attention to the unscrupulous and anti-business practices of Visa and MasterCard’s electronic gift cards.  The cards raise questions about the hidden interchange fees forced upon unsuspecting merchants and consumers who do not understand that those “convenient” payment solutions come with a hefty price tag; retailers are forced to pay interchange feeswhen those cards are used; many shoppers loose out when micro-balances remain on the cards.  Even retailer-generated gift cards come with costly baggage; many times the small balances are simply not redeemed because it is to hard to cash in a few dollars that remain on the card and to pay the exact amount remaining.

Just down the road from ScanMyPhotos.com [a division of 30 Minute Photos Etc – lead plaintiff in the merchant interchange antitrust price-fixing litigation] and home to our Irvine, California-based headquarters is the famed South Coast Plaza.  According to Wikipedia, “South Coast Plaza is an upscale shopping mall, and one of the most notable shopping centers in the United States. In 2004, Women’s Wear Daily reported that the mall had the highest sales per square foot of any mall in California, at about $800. It is also the third biggest mall in the United States.”  South Coast Plaza has disbanded its electronic gift cards for paper certificates.

As reported by Orange County Register reporter, Hang Nguyen on August 19,

South Coast Plaza recently switched from its mall gift cards to gift certificates.  The decision was driven by shoppers and retailers who preferred the “ease of gift certificates and were frustrated by the limitations of the gift-card program,” which launched less than two years ago, the Costa Mesa mall said in a statement.  If shoppers wanted to pay their purchases with both cash and a gift card, they had to know the exact amount on the card. To get that info, they went online, slid the card through one of about 30 readers at the mall or called a number on the card. However, the retailer was not able to tell them their card balance.  And if the retailer punched the wrong amount for the card twice, the shopper might have been locked out from using the card for 5 to 7 business days.  With certificates, the dollar amount is on the paper.  Also with cards, after one year, a $2-per-month fee was applied to unused balances. This fee was charged by American Express, a South Coast Plaza spokeswoman said. The mall said it did not have control over this charge, which is common from third-party issuers.  Because gift-certificate processing and management is done in-house, South Coast Plaza can choose to not charge shoppers a fee. It considers its no fee for certificates as part of the mall’s customer service.  Also with gift cards, it would take five to seven business days for the customers to see the return issued on the card, unless they returned the merchandise the same day.  Funds are immediately available after returns of purchases made with gift certificates.  If a shopper does not use the entire certificate amount, the retailer can give up to $20 cash back or a store credit. Or the customer can go to the concierge desk to have the certificate broken down into smaller amounts.  “While it may seem like a surprising decision, we discovered that high-tech options don’t always translate to better customer service,” Debra Gunn Downing, the mall’s executive director of marketing, said in a statement.  Shoppers can convert gift cards into gift certificates at any concierge location. All existing gift cards will continue to be honored.” 

Visa and MasterCard branded gift cards are even worse and come with added concerns as identified by several prior WayTooHigh.com postings.  Now, a leading shopping centre has caught on and switched back to paper certificates.

All About the Visa and MasterCard Promotional Gift Card Scheme

Visa and MasterCard Branded Gift Cards Force Unjust Penalty on Consumers

Visa and MasterCard Gift Cards: Almost as Profitable as Interchange Fees

Visa and MasterCard Gift Cards, Part II

The New York Times’ Personal Tech Columnist, David Pogue Profiled ScanMyPhotos.com

Wednesday, August 13, 2008

The New York Times’ Personal Tech Columnist, David Pogue Profiled ScanMyPhotos.com

Read the New York Times August 14th ScanMyPhotos.com profile here.

“… the ScanMyPhotos.com service could turn out to be the best $50, plus shipping and optional services, you’ll ever spend.”

“…the results are well worth it. [ScanMyPhotos.com] ships your original photos back to you by Priority Mail (two or three days), complete with a nicely custom-labeled DVD.”

“The scans look very good.”

“ScanMyPhotos probably isn’t getting rich by charging only $50 per 1,000 photos. Clearly, the real money is in the optional services, some of which are ingenious and nearly irresistible. For example, for $125, the company will send you a pre-addressed shipping box that holds 1,600 photos (4 x 6); the price includes scanning and prepaid shipping both ways. If you buy two, you get a third box free, making the deal, when you consider postage, even better than the $50 offer.”

“… you can order a hardbound, custom-printed book containing every single scanned picture; the company even rotates the vertical shots upright for you. The layout is not fancy — the pictures are small and numbered — but in my family, this book was a huge hit.”

Click here to view the New York Times’ August 14th feature on ScanMyPhotos.com

 

photo scanning, slide scanning, how to scan photos David Pogue, Eastman Kodak Company, Kodak scanner, Personal Tech, Scanmyphotos.com

 

 

“The Hidden Fee That Costs Us Money” (via blogger)

Excerpt from a blogger

Interchange fees. I’ve talked about these before, but not in a post all their own. These little buggers are responsible for consumers paying over $400 a year in “fees,” whether they use a credit card or not. And, in my opinion, that’s worthy of a rant all its own.

Hopefully, most of you have heard of interchange fees, but some may not. That’s the thing about these fees – credit card companies don’t want the average consumer to know about them, because then we can complain. It’s in their contracts with merchants not to disclose this fee on the receipts. Basically, a credit card company charges the merchant – usually about 2% of the transaction amount – to process credit card transactions. Every time you swipe your card, the merchant has to pay the credit card company. There are numerous sets of fees they have to pay, but it’s this interchange fee that indirectly affects us consumers the most.

click here to read more.

8-8-08: Visa’s Olympic Moment Tarnished By Mega-Billion Dollar Battle Against its Customers

Throughout the next two weeks, as the world gathers together to celebrate the Olympic Games, millions of businesses worldwide are sure to take note of Visa Inc’s Olympic sponsorship.  While the company poses as a friend to consumers, each time you watch a Visa Inc. TV commercial, remember that they are part of what could be the nation’s largest illegal antitrust conspiracy.  As a lead plaintiff and included among the first to launch the payment card interchange fee and merchant discount antitrust litigation, I anticipate many opportunities to review and comment on Visa Inc’s Olympic marketing campaigns. 

From the complaint filing, here are several points of interest:

 

For over 40 years America’s largest banks have unlawfully fixed the fees imposed on merchants for transactions processed over the Visa and MasterCard Networks and have collectively imposed restrictions on merchants that prevent them from protecting themselves against those fees. Despite the Networks’ and the banks’ recent attempts to avoid antitrust liability, their conduct continues to violate the Sherman Act.”

 

All of the Bank Defendants belong to both networks and have conspired with each other and with the Visa and MasterCard Associations to fix the level of Interchange Fees that they charge to merchants. Many of the Bank Defendants are, or were during the relevant period, represented on the Visa and/or MasterCard Boards of Directors at the times when those Boards collectively fixed uniform Interchange Fees and imposed the anticompetitive Anti-Steering Restraints and Merchant Restraints, tying and bundling arrangements, and exclusive-dealing. The Bank Defendants delegated to the Visa and MasterCard Boards of Directors the authority to take those actions.  Each of the Bank Defendants had actual knowledge of, participated in, and consciously committed itself to the conspiracies alleged [within the complaint].

 

Bank Defendants are therefore directly responsible for collectively fixing Interchange Fees within each Network and between the two Networks. Bank Defendants, acting by and through the Boards of Directors of Visa and MasterCard, are also directly responsible for the tying and bundling of separate and distinct services together in those Interchange Fees, the imposition of the Anti-Steering Restraints and engaging in the other anticompetitive conduct alleged herein. Collectively, the Bank Defendants, through their operation of Visa and MasterCard, adopted and approved the above-mentioned policies and have significantly profited from those policies. 

 

Even after the corporate restructuring of the Visa and MasterCard Networks, the banks have remained intimately involved in the imposition of supracompetitive interchange fees on merchants. Acquiring banks enter into acceptance contracts with merchants agreeing either implicitly or explicitly that the Networks’ uniform schedule of interchange fees will apply to all of the merchant’s transactions that are initiated by Visa or MasterCard Payment Cards. These Acquiring Banks understand that the same uniform schedule of Interchange Fees will be applied to transactions conducted by all other Acquiring Banks for those banks’ merchant customers. Issuing Banks enter into issuing contracts with the Networks, agreeing and understanding that they will receive Interchange Fees from merchants based upon the Networks’ uniform schedule of Interchange Fees.

 

Visa and MasterCard “are not single entities; they are consortiums of competitors”. Before the corporate restructuring, they were “owned and effectively operated by over 22,000 banks, which compete with one another in the issuance of Payment Cards and the acquiring of merchants’ transactions.”  Because of this judgment, among other things, the Networks and their member banks recognized that the Networks were “structural conspiracies” and “walking conspiracies.”

 

Various persons, firms, corporations, organizations, and other business entities, some unknown and others known, have participated as co-conspirators in the violations alleged and have performed acts in furtherance of the conspiracies. Co-conspirators include, but are not limited to, the following: (a) Issuing Banks that have issued Visa and/or MasterCard Credit and Debit Cards and have agreed to charge uniform, collectively fixed Visa and MasterCard Interchange Fees for various merchants and transactions; (b) certain banks that are or were members of the Boards of Directors of Visa or MasterCard and adopted and agreed to fix Interchange Fees for various merchants and transactions and to impose the anticompetitive Anti-Steering Restraints and Miscellaneous Exclusionary Restraints alleged herein; and (c) Acquiring Banks that acquire Visa and MasterCard transactions from members of the Classes, and that have participated in the conspiracy to collectively fix Interchange Fees.

 

Conspiracy issues.

 

Whether (a) Visa and its member banks, and (b) MasterCard and its member banks illegally fixed uniform schedules of default Interchange Fees for Credit-Card transactions, which

were imposed on merchants in the market for Network Services for such cards, thereby extracting supracompetitive Interchange Fees and Merchant Discount Fees from members of the Classes; Whether (a) Visa and its member banks, and (b) MasterCard and its member banks illegally fixed uniform schedules of default Interchange Fees for Offline-Debit-Card transactions,

which were imposed on merchants in the market for Network Services for such cards, thereby extracting supracompetitive Interchange Fees and Merchant Discount Fees from members of

the Classes; Whether (a) Visa and its member banks illegally fixed uniform schedules of default interchange fees for Interlink Offline-Debit-Card transactions, which were imposed on merchants in the market for Network Services for such cards, thereby extracting supracompetitive Interchange Fees and Merchant Discount Fees from members of the Classes;

iv. Whether Visa, MasterCard and their member banks possess or exercise market power or monopoly power in the markets alleged in this Complaint; Whether Visa and MasterCard and their dual member banks conspired with each other to fix the price of Interchange Fees imposed on the Classes in the relevant market; Whether the merchant restraints imposed by Defendants

facilitated Defendants’ respective price-fixing arrangements; Whether the conspiracies of the Visa and MasterCard Networks continued after the Networks’ reorganizations and IPOs; and Whether the per se rule or the rule of reason should be applied to analyze the price-fixing schemes of Visa, MasterCard, and their respective member banks.

 

b. Monopolization issues.  Whether Visa and its member banks exercise market power or monopoly power that was willfully acquired and/or maintained, in various markets as alleged in this Complaint; and; Whether MasterCard and its member banks exercise market power or monopoly power that was willfully acquired and/or maintained, in various markets as alleged in this Complaint.

 

c. Impact and damages issues.  Whether virtually all class members were overcharged for Visa and MasterCard transactions when higher Interchange Fees were extracted from them than could have occurred in a competitive market; Unlike Payment-Card transactions in other jurisdictions, the fees imposed by banks on merchants for Payment-Card transactions in the United States are almost completely unregulated by any level or unit of government. Rather, those fees, and the rules that apply to all Payment Card transactions, are privately and comprehensively regulated by Visa, MasterCard, and their member banks. Thus, the Relevant Market alleged in this complaint can reach an equilibrium between supply and merchants’ demand for those services only if market forces are effective. At all times relevant to this action, Visa, MasterCard and their member banks have conspired to restrain these market forces.

Do Visa and MasterCard Force Stores to Accept Credit Cards?

Millions of dollars in Pavlovian-like marketing force consumers to use electronic plastic payments  rather than cash; leading to also forcing merchants to accept Visa and MasterCard. 

Click here to view one example.

How Visa and MasterCard Force Businesses to Accept Credit Cards for Payments

While the actors in this “Life Takes Visa” spot might be all smiles and singing, they surely would have a different expression if they were on the receiving end of those plastic cards.  Millions of retailers do anything but dance when they open their monthly interchange bill for being forced to acceptVisa and MasterCard’s.  Then again, Visa surely smiles, as they earn a “discount” fee from each transaction.  Why exactly do they call it a “discount” fee anyway when it could also be described as an extortion fee?  It is anything but a discount.  The fees paid to Visa and Mastercard’s member banks and to the two giant credit card associations lead towards a nearly $50 billion annual hidden tax on Americans.

Did Visa and MasterCard’s Greed Force Starbucks to Fire 600 Employees?

Repost

[The] news that Starbucks was terminating 600 staffers is important because the company could have saved those jobs if they didn’t fall victim to the credit card associations’ scheme to train consumers to use plastic rather than cash for small, micro-payment transactions. 

Yes, it is easy to handover a premium signature card for a cup of coffee, but did Starbucks know that on those one-dollar transactions, much of the profits are going to Visa and MasterCard’s member banks? 

While we are unsure of what Starbucks’ merchant interchange fee rates are, it is transparent that the cost on their small items is vast.  Credit card payments are useful to encourage add on purchases when you don’t have cash, but most people have a few bucks in their pocket.

• What is Starbucks’ annual global merchant interchange fee? 
• Has the company also wondered why each international region comes with unique interchange fees, even though the electronic payment service is nearly identical?  
• Do the Baristas know the difference when they process payment cards as “credit” vs “debit?” 
• Has Starbucks wondered why there are interchange fees on the four-party electronic payment network, but no fees when they process Starbucks Cards across their network of retail and online ordering.

  

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

“Resisting the Rush to a World of No Cash” (via NY Times)

Excerpt:

Take Peter Luger, the famous steakhouse in Williamsburg, where dinner for two can easily top $300, but credit cards are useless. “I’ve heard people complain, but they don’t care: they’re full most every night,” Tim Zagat, owner of Zagat restaurant guides, said of Luger. “Most restaurants don’t want to be in a position of embarrassing their diners by telling them, ‘Sorry, you’ve got to pony up cash,’ if they weren’t expecting it. But the owners of Peter Luger are just peculiar in the way they run the business.”  Marilyn Spiera, a member of the family that owns the restaurant, said she simply preferred not to pay the 2 to 3 percent fees that credit card companies charge vendors to use them.

Clich here to read more.

[Source: NY Times, Austust 2]

“Hidden Credit Card Fees Are Costing You” (via CNN Money)

New legislation may mean an end to interchange fees, which cost the average family more than $400 a year

By Jessica Dickler, CNNMoney.com staff writer

Last Updated: July 31, 2008: 5:20 PM EDT

NEW YORK (CNNMoney.com) — Swiping your credit card at the register may save you time, but it certainly won’t save you money. Thanks to hidden fees, credit card purchases are costing you more than you may know.

Whether you use a card or not, you’re probably paying more than $400 a year in “interchange fees,” which are factored into the prices of everything from gas to groceries.

Every time a credit card or debit card is used to pay for a transaction, merchants pay a “merchant discount fee” to the bank for processing the payment. That covers the cost of renting the credit card terminal, customer service and an interchange fee, which all adds up to about 2% per transaction.

The interchange fee is by far the biggest chunk of the merchant discount fee. But it goes largely undetected by consumers because it’s included in the advertised price of items and, merchants say, is too complicated to break out on individual receipts.

But credit card use has become so prevalent, it’s costing retailers a fortune in fees. So merchants pass on this cost to consumers by way of higher prices, which means that even shoppers who don’t use plastic end up paying more.

The average American family will pay $427 because of interchange fees in 2008, up from $378 in 2007, according to National Retail Federation estimates. The amount has nearly tripled from the $159 paid in 2001, the year NRF began tracking interchange fees. Collectively, that’s $48 billion that the credit card companies will make from interchange fees this year, up from $42 billion last year and $16.6 billion in 2001.

So where does all that money go? Credit card issuers use this revenue stream to pay for the processing, in addition to reward programs, credit losses and general operating costs.

But many consumer advocacy groups believe it’s time to put a stop to the bank fees that eat into retailers’ profits, and push up prices paid by consumers.

Congress takes action

“At a time when Americans are struggling to pay for groceries and to fill the gas tank, doing something about a hidden fee that drives up the cost of basic necessities should be one of Congress’ top priorities,” Steve Pfister, NRF senior vice president for government relations said in a statement.

Last week the House Judiciary Committee voted to move forward with the Credit Card Fair Fee Act of 2008, which requires lenders to negotiate with merchants and retailers on terms for fees paid when processing card transactions. The hope is that more flexibility to negotiate will bring interchange fees down, which will in turn allow merchants to keep their prices down. It also calls for the credit card companies and banks to be more transparent about their fee structures.

Most retailer and consumer groups support the change. As the legislation moves to the House floor, banking groups are voicing their opposition.

Edward Yingling, president and CEO of the American Banker’s Association, said in a statement that the bill “interferes with the smoothly functioning electronic payment system that currently works to the benefit of consumers, businesses and the broader economy.”

Not only would hindering the electronic payment system hurt businesses that benefit from faster transaction times and increased sales, the banking group said, but the legislation could also hurt consumers, by forcing credit card companies to raise their interest rates to cover costs.

Josh Floum, general counsel for Visa Inc., called the Credit Card Fair Fee Act “an anti-consumer bill that would mandate unnecessary regulatory intervention into a fiercely competitive industry that is benefiting consumers, merchants and financial institutions.”

And if passed, the bill would give more power to the largest retailers and therefore “suppress competition and innovation and result in unintended and harmful consequences for consumers,” Floum said.

MasterCard echoed the sentiment in a press release issued in response to the Judiciary Committee’s approval. “It would be inappropriate for the U.S. government to set prices and negotiate the terms of contracts for private commercial entities.”

But merchants aren’t buying it. Mallory Duncan, chairman of the Merchant Payments Coalition, a retailing advocacy group, said the system as it stands hurts retailers more than it helps them.

And retailers aren’t the only ones losing out, says Duncan. In tough economic times, consumers can’t afford to cough up extra cash to credit card companies. “They’ve had a very sweet ride for 30 years,” Duncan said.

Now lawmakers in Washington will duke it out. The issue pits those who say they are trying to alleviate the financial burden on consumers against those who are aiming to prohibit regulatory intervention and uphold the free market policy the credit card contracts are based on.

Congress is likely to vote on the Credit Card Fair Fee Act by the end of this year.

[Source: CNN Money]

Bank Funded Coalition Fires Blanks With Baseless Press Release

The bank funded association called Electronic Payments Coalition issued the following press release which is largely debunked from many of the prior WayTooHigh.com postings.  It is as silly as Senator McCain’s  commercial attempting to link Senator Obama with Brittney Spears and Paris Hilton. 

Personally, I cannot think of anything more anti-competitive than interchange fees, along with Visa and MasterCard’s business model; leading to a nearly $50 billion annual hidden tax on Americans. 

What was so remarkable about the below news release was the public comments by Visa and MasterCard.  Collectively,  Josh Floum, general counsel for Visa Inc. and MasterCard both boldly described their industry as being “fiercely competitive.”  With a staggering 80% market power and unbridled control over the world’s electronic payment network, the reality is they are fierce, but only to protect their cartel at all costs to benefit their member banks, rather than consumers.  Average shoppers are forced, along with merchants, to pay this nearly $50 billion annual hidden tax that is no longer based on cost, but rather pure greed.  Mr. Floum even said that if the Credit Card Fair Fee Act is passed it will “suppress competition and innovation and result in unintended and harmful consequences for consumers.” 

I have not read this type of scare tactic since the Washington, DC, public relations firm, Creative Response Concepts concocted the “Swift Boat” campaign, so I would not be surprised if that firm are also regular readers of WayTooHigh.com.

From the below press release, the card association’s claim that their fees on gasoline are only a penny or so a gallon, then why does ARCO discount as much as they do or Mr. Small gas station immediately cut prices by 10 cents a gallon when they have a cash option? And, why are thousands of independent service station owners being forced to close down, as interchange fees have doubled along with gas prices?

The Electronic Payments Coalition press release is reprinted in its entirety, below.

Consumers Looking for Relief at the Gas Pump, Not More PR Spin From Lobbyists in Washington, DC. NACS Pumptopper Gimmick Misleads Consumers about High Gas Prices

July 31, 2008

WASHINGTON, July 31, 2008 /PRNewswire/ — Today, the Electronic Payments Coalition called on gas retailing members of the National Association of Convenience Stores (NACS) not to display “pumptopper” advertisements that mislead consumers about the cause of high gas prices. The NACS ad gimmick is part of a high-cost lobbying campaign designed to provide a financial windfall to the world’s most profitable companies at a cost to consumers.

“American consumers are looking for relief from skyrocketing gas prices — not gimmicks from a high priced lobbying campaign designed to line the pockets of the largest and most profitable retailers,” said Peter Madigan, executive director of the Electronic Payments Coalition. “This sort of deceptive advertising campaign about the cause of high gas prices does not do consumers any good and insults their intelligence.”

Congress is currently considering legislation that would provide large retailers an antitrust exemption that would legalize collusion in order to artificially lower the prices they pay to accept credit and debit cards. This government intervention to lower retailers’ costs of doing business will ultimately increase the cost of credit for consumers, decrease or eliminate card reward programs, and reduce access to affordable credit for those who need it.

As an alternative, the Electronic Payments Coalition has provided free posters and flyers — available as a download through the EPC website ( http://www.ElectronicPaymentsCoalition.com) — to help them educate their customers on the true costs associated with a gallon of gas, as provided by a credible source — the U.S. Department of Energy.

“It is grossly misleading — and frankly not even believable — to imply that the penny or so per dollar merchants pay to accept credit cards has anything to do with skyrocketing gas prices,” said Madigan. “Credit and debit cards offer significant benefits, both to the gas retailers that accept them, and to the customers that pay with them. It is important that consumers have a clear understanding the full picture here.”

According to the Energy Information Administration, which are official energy statistics from the United States government, the price for a gallon of regular gasoline breaks down accordingly: crude oil (74%), taxes (10%), refining (9%) and distribution and marketing (7%).

About the Electronic Payments Coalition

The Electronic Payments Coalition is dedicated to protecting consumer value, choice and competition in the electronic payments system. The coalition is a broad-based group of payment card networks, financial services companies, and financial services trade associations whose primary goal is to educate policy-makers, consumers and the media about the value of electronic payments systems — including economic growth, convenience, speed, reliability, and security — and to ensure the continued growth of global commerce by promoting consumer choice and the stability of the vast payment networks that connect millions of consumers with millions of retailers each and every day.

SOURCE Electronic Payments Coalition

http://www.electronicpaymentscoalition.com