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54 March 2014 | beautystorebusiness.com Beauty & The Law Jan. 1, 2004, and Nov. 27, 2012. If groups of merchants band together to negotiate lower swipe fees, Visa and MasterCard must negotiate with them in good faith. Visa and MasterCard also agreed to change their rules so that merchants can pass along surcharges to consumers who use credit cards, but not debit cards. The ability to surcharge customers for credit card use could save merchants between $26 billion and $62 billion over the next 10 years. Consumers will be able to make more rational decisions about how they pay for their purchases and avoid transac- tion fees because they will be aware of the transaction costs. The Court said that eliminating the ban on surcharges "has the potential to alter the very core of the problem this lawsuit was brought to chal- lenge." However, this beneficial aspect of the settlement is only available in states that don't prohibit these surcharges, and nine states still make surcharges illegal. Several provisions of the settlement will severely limit retailers' ability to collect sur- charges even in states where they are legal. Retailers who accept American Express will not be able to surcharge consumers who use Visa or MasterCard because surcharges on Visa and MasterCard are only permitted when they are imposed on all credit and debit cards that the merchant accepts, and American Express still bans surcharges. In addition, merchants who impose surcharges will have to post signs at the entry and at the point of sale, as well as reprogram their cash registers to print the surcharges on receipts. Merchants must give the credit card companies and their banks advance notice before they impose surcharges. The settlement doesn't change the credit card company rule requiring mer- chants to accept all Visa or MasterCard cards no matter what the swipe fees are, and it doesn't change the default fee. Several parties are seeking to set the settlement aside. The National Retail Fed- eration filed an appeal in January, arguing that swipe fees have skyrocketed and the settlement does nothing to stop that prob- lem. The settlement will not become final until all appeals have been decided. RETAILERS CAN CLAIM DAMAGES UNLESS THEY OPTED OUT The class of companies bound by the settlement consists of all people and businesses that accepted Visa or Master- Card between Jan. 1, 2004, and Nov. 27, 2012. According to the NRF, almost 8,000 class members opted out of the settle- ment before the deadline in May 2013. The companies that opted out are free to press their claims against Visa and MasterCard and are not restricted by all the terms of the settlement. Because they have withdrawn from the settle- ment, they cannot make claims against the $5.7-billion settlement fund. The remaining class members can file for damages from the settlement fund. The court approved a website, Payment CardSettlement.com, which will have information about making claims. DEBIT CARD FEE REGULATIONS FOUND ARBITRARY AND CAPRICIOUS The swipe-fee antitrust case is only one of several high-profile lawsuits challenging swipe-fee rules. Another litigation chal- lenged swipe fees applied to debit cards only. Congress passed a law called the Durbin Amendment that required the Fed- eral Reserve to set a maximum fee that banks could charge, and required the fees to be "reasonable and proportional to the cost incurred by the issuer with respect to the transaction." It was named for Senator Richard J. Durbin, who was the primary author of that amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Act. Later in 2010, the Federal Reserve proposed capping the swipe fee for debit cards at 12 cents. The final rule that the Federal Reserve issued increased the maximum swipe fee to 21 cents plus 0.05% of the debit card transaction plus another penny if a bank met certain fraud- prevention criteria. It only applies to issuing banks with assets more than $10 billion. Several industry organizations, including the National Association of Convenience Stores and the NRF, challenged this rule in Federal Court on the grounds that the rule was arbitrary and capricious, and that the Federal Reserve abused the discretion that the law granted. Senator Durbin himself submitted a brief to the court in support of the plaintiffs' position. While Congress was considering his amendment, he had said that debit cards resemble checks because "[a]ll that happens ... is you deduct money from your bank account." B e a u t y A n d T h e L a w 3 1 4 . i n d d 5 4 Beauty And The Law 314.indd 54 2 / 3 / 1 4 3 : 1 9 P M 2/3/14 3:19 PM