Mary Watson v. Plastic: A Tale of One Pissed-Off Retailer

April 18th, 2011. By Hunter West

We’ve been ticked off at credit card companies for a long time, haven’t we? The high interest rates, the late-payment fees, and the propensity to jack up the rates at the drop of a hat. Congress finally called the credit card companies to the carpet and forced them to reign in some of their practices—although critics have always maintained there will be other ways found to make up for any lost revenue. 

And that’s just for us—the schmucks who use credit cards. What about the merchants? 

Well, according to a proposed class action lawsuit filed Monday in Canada, merchants aren’t happy with the status quo, either… 

Mary Watson is a retailer who operates a furniture store in British Columbia. She has since 1990. And like most merchants who sell big-ticket items, she can understand that most people would rather use plastic to buy that pricey leather sofa, than pull out a wad of hundred-dollar bills. 

No, she’s okay with that. What Mary is upset about are all the fees charged to her business when a consumer uses plastic. The fees are hard to track. What’s more, she’s not allowed to promote, or suggest that her customers use an alternative form of payment, such as cash or debit.

She’s not exactly required to suggest her customers use their credit cards. But at the same time, she isn’t allowed to suggest that they don’t. 

Did we mention fees? Ah yes, those wonderful fees. There are three fees that are charged whenever a consumer pulls out the plastic—whether it’s to buy a new washing machine, or a chocolate bar. The credit card company gets a fee, as well as the company that processes the transaction. The issuing bank gets a fee, too. 

The fees are a percentage of the transaction. 

Oh, it gets better. You know those credit cards that advertise reward points for using their cards? You think, ‘good on the Mom’s Apple Pie-in-the-Sky Just Desserts Rewards Card, the use of which racks up points you can redeem for free ice cream and pastries.’ That’s a metaphor, of course, for all the cards that offer points for travel, golf vacations, you name it. 

Such premium cards charge higher fees to the merchant, to cover their costs. And you thought the credit card companies, and banks were being generous… 

Yeah, right. 

Plaintiff Mary Watson says she’s prevented from charging her customer a higher fee for using a premium card. Instead, she either has to eat the cost herself, or pass those costs along to every consumer—even those who use cash—through higher prices for her wares. 

Watson told the Vancouver Sun that the statements are confusing. “Every month I get a statement and there are at least 10 different categories of fees listed,” she said in an interview from her Kitsilano store the day after filing her lawsuit in BC Supreme Court.

“Why do we have to have some hidden secret code to crack to find out what it is going to cost you to do business?” 

The suit names Bank of America Corp., Capital One Financial Corp. and Citigroup Inc. in the US. In Canada, the defendants include Visa Canada Corp. and MasterCard International Inc., Royal Bank of Canada, Toronto-Dominion Bank, BMO Financial Group, the Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada and the Federation des caisses Desjardins du Quebec. 

Watson’s lawsuit covers transactions dating back to 2001. Her lawyer suggested that this basket of fees cost merchants $5 billion in 2009 alone. The lawsuit suggests the fees are bad for merchants, bad for consumers and unhealthy for the economy as a whole. 

The allegation is that the defendants engage in a multi-billion price-fixing conspiracy. 

Ya think? 

Watson says she’s not in it for the money. All she wants to do is make some noise. “I’d like to be able to have a statement that I can read and know what it is going to cost me.”

Wouldn’t we all…

Tags: Bank of America, Bank of Nova Scotia, BMO Financial Group, Canadian Imperial Bank of Commerce, Capital One, Citigroup, Credit Card fees, credit cards, Federation des caisses Desjardins du Quebec, Mary Watson, MasterCard International, National Bank of Canada, Retailer fees, Royal Bank of Canada, Toronto-Dominion Bank, Visa Canada

This was posted on Monday, April 18th, 2011 at 9:15 am and is filed under Financial, lawsuits . Feel free to respond, or trackback. Read our comments policy.