Astroturfing for High Credit Card Fees

I hope you don't mind me bringing up a non-NEO, non-OH specific topic, but I've been trying to get some attention for it. Because full disclosure is important to me, let me say first I'm doing some work for UnfairCreditCardFees.com, which is a coalition of small businesses standing up to the credit card industry.

Their main issue is one that's close to my heart, because I have family who have run a small drugstore and dealt with the "interchange fee." If you haven't heard of it, on the surface it's just a processing fee. But it's also the single biggest money-maker for Visa and MasterCard, and they make it against the law for a small business owner to even tell the customer about it, let alone offer a cash discount.

AmEx has changed its ways about this, but the suspicion is that Visa/MC are collaborating anticompetitively. That's why Chris Dodd and Carl Levin have been holding hearings -- not just this of course, but a bevy of "tricks and traps" aimed at consumers and merchant account holders.

What's more, is that the banks behind Visa are using deceptive tactics to pressure lawmakers who try to stand up to them. This week in CQ Weekly (unfortunately not online) there's an article about this.

The article is called "Lobbying War Brewing Over Credit Card Fees." I'm transcribing, so any typos are mine alone:

Last month, Gary Elkins, a Republican member of the Texas Legislature from Houston, set out to win a break for small businesses in his state. For some time, mom and pop stores had complained to Elkins about the bite that credit card processing fees were taking out of their profits... Some merchants even stopped accepting credit cards because the fees made smaller transactions too costly to conduct. So Elkins decided to introduce a bill permitting retailers to consolidate their procesing costs into a single surcharge...

I draw 2 lessons from this. One is that this issue could be co-opted away by Republicans who would argue it's pro-business. Well, it IS pro-business, especially pro-small business and it's pro-consumer, too. I believe that Republicans are going to start talking pocketbook issues before 2008, and if they can find a way to be pro-consumer while being pro-business (it's the only way they would) then this is the kind of opportunity to do so. So it seems to me that not only should we ask Democratic leaders in Congress to put pressure on the credit card companies because it's the right thing to do, but as a partisan Democrat, it's in our interest to do so.

But wait until you find out what happens next:

When a Washington advocacy group called Americans for Consumer Education and Competition heard about the proposal,  it instantly alerted a roster of Texas-based suporters culled from respondents to consumer spam appeals. They were directed to a Web site... which in turn helped dispatch about 150 heated e-mails opposing the bill to Elkins and his colleagues in the Legislature.

Not relishing such an onslaught, Elkins withdrew his bill a week after the e-mails started to arrive...  But what Elkins and [his chief of staff][ didn't realize was that the main consumer group they heard from was actually fronting for the industry. Americans for Consumer Education and Competition was founded in 2000 by credit card giant Visa Inc. Its principal reason for being is to generate grass-roots opposition -- or the appearance of it -- to defeat proposals such as Elkins'.

Wow. Your constitutents say they want X, then an industry front group spams your office asking for Y, and Y you do. Pathetic, but maybe fortuitous in the short run (for admittedly partisan reasons). Either way, it's a reminder that big business is ready to crush small business by deceptive tactics.

One more excerpt:

Real consumer advocacy organizations, such as the Consumer Federation of America, sympathize with retailers. Interchange fees, assessed by banks that process transactions are part of a long line of charges that are "not adequately disclosed and are simply not fair," said Travis Plunkett, the Consumer Federation's legislative director.

That part brought a smile to my face, all right. As I've pointed out before, it's a consumer issue because ultimately those fees are paid by consumers. Right now, merchants have no choice but to pass those fees along, and so now that they're fighting to get them lowered, it's in all of our interests to get them lowered.

Let me plug my group's site again: UnfairCreditCardFees.com. If you happen to be a merchant and you've experienced this as a problem, please submit your story! If not, there's info there to send a message to your congressional representative.

Hope this creates some discussion. If it's a little esoteric, I understand.