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56 March 2014 | beautystorebusiness.com Beauty & The Law Bold lashes without the bulk! Introducing Godefroy PermaCurl is an easy to apply gel that transforms fine, limp lashes into dramatic long-lasting curls. UÊEasy to apply and remove UÊes not flake or dry out lashes UÊCan be used with or without mascara UÊlds curl all day Before After Innovative Beauty Products, LLCÊUÊArlington, TX 800-854-9809ÊUÊwww.godefroybeauty.com But he noted, "There are zero transaction fees deducted when you use a check." Both the Durbin Amendment and this case are limited to debit card fees and don't address credit card fees. The Court that heard the challenge to the rule concluded that banks can only charge debit card users the incremental costs that the banks incur for each card transaction, and cannot charge for fixed costs, such as network connectivity or fraud losses. The judge was obviously fed up with the illogical positions taken by the Federal Reserve, and rejected one of its arguments with the one-word sentence: "Please!" The Court vacated the Federal Reserve's rule, but let it stay in effect until new rules are enacted in compliance with the statute. The Federal Reserve has appealed. The Merchants Payments Coalition study found that the Federal Reserve regulation, despite its many flaws, already saved merchants $8.5 billion in 2012, and merchants shared more than two-thirds of the savings with consum- ers. The report says that in each of the first nine months of 2011, before the regulations were issued, American con- sumers used debit cards 3.8 billion times to buy $150 billion worth of goods and services. The average swipe fee was 48 cents, but the transaction cost to the banks was only 5 cents. Over those nine months, swipe fees totaled $16.7 billion. Since the Federal Reserve's flawed rule came into effect, the average swipe fee on debit cards has been just 24 cents. The study pointed out that the fixed swipe fees disproportionately impact small transactions, and that the fees for transac- tions of $15 or less were actually increased. NEW YORK'S BAN ON SURCHARGES WAS INVALIDATED The judge in the swipe-fee antitrust settlement said that state laws that prohibit merchants from imposing sur- charges on card users will weaken the effectiveness of the settlement, and he called them "anti-consumer." A New York Federal Court agreed when it ruled that the state law banning surcharges was so irrational that "Alice in Wonderland has nothing on" the New York law he set aside. The businesses that sued in New York did not want to offer cash discounts because they would be forced to adver- tise the higher, undiscounted price. They wanted to be able to tell their consum- ers what the swipe fees added to their prices. But, as the judge explained, if a vendor told a customer that the retail price included a surcharge because of swipe fees, the vendor risked criminal prosecution. The plaintiffs argued that they wanted to tell consumers about the fees "precisely because consumers are more likely then to notice the fees, dislike them, and switch to cash in order to avoid them. Over time, this behavior will place downward pressure on swipe fees, which credit card companies will be forced to reduce in order to prevent more and more consumers from switch- ing to cash." The First Amendment's guarantee of free speech won out over the state law, and the judge found that the ban on surcharges is unconstitu- tional and issued an injunction preventing the state from enforcing it. The judge pointed out that the ban on surcharges also had the effect of making people who pay by cash or check subsi- dize the credit card users. Poor consumers often don't qualify for credit cards, so the result was that poor consumers subsi- dized wealthier consumers who do qualify for credit. After the New York decision, nine states still ban surcharges: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas. Retailers in these states can't take full advantage of the provision in the antitrust-case settlement that allows surcharges. Visa's website provides links to the attorneys general of these states so that consumers can file complaints about surcharges more easily. ■ This copyrighted article is intended to help make you aware of some of the issues that you may face, but it is not exhaustive and does not constitute legal advice. You should consult your lawyer for legal advice about the particular circumstances of your beauty business. Jean Warshaw is a lawyer in private practice in New York City. She provides advice on business and environmental law. She can be reached at 212.722.2240. B e a u t y A n d T h e L a w 3 1 4 . i n d d 5 6 Beauty And The Law 314.indd 56 2 / 3 / 1 4 3 : 2 0 P M 2/3/14 3:20 PM