The judge who rejected the Federal Reserve’s regulations governing debit fees under the Dodd-Frank Wall Street Reform and Consumer Protection Act gave the Federal Reserve until Aug. 21 to come up with a position on interim fee reductions and a timeline for permanently installing new lower fees. He also suggested that retailers should be repaid by financial services companies for millions of dollars in overcharges.
Judge Richard Leon for the U.S. District Court in Washington in late July agreed with retailers and rejected the Federal Reserve’s regulations governing swipe fees, ruling that the agency set the cap too high on debit-card transactions.
Judge Leon said the Federal Reserve Board disregarded Congressional intent when deciding how much banks can charge for the transactions.
Judge Leon is ordering lawyers from both sides of the case to come up with ways to make financial services companies reimburse businesses for what he calls “overcharges.”
Overcharges are the difference between what the Federal Reserve’s swipe fee limits have been since Oct. 1, 2011, and what they should have been based on the reform law’s requirement that swipe fees be “reasonable and proportional to the cost incurred by the issuer.”
In court, a lawyer for a coalition of financial services groups told Judge Leon that his clients will fight any such payback.
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