Earlier this month, the U.S Department of Justice and seven states attorneys general simultaneously filed a lawsuit against, and reached a proposed settlement with, several major credit-card companies. The results of these actions could potentially change the way everyday goods are priced, depending on your method of payment.

Under the settlement, Visa and MasterCard agreed not to engage in anti-competitive practices that block merchants from offering customers discounts or rebates based on their use of a particular type of card. American Express, also named in the Federal suit, filed on Oct. 4 in Brooklyn, denied any wrongdoing and will challenge the government complaint.

Central to the issue are “swipe” fees the companies and their affiliate banks charge merchants every time a consumer makes a credit-card purchase. Such fees totaled $35 billion last year, according to the Justice Department.  The lawsuit alleges that the credit-card companies imposed rules that block sellers from offering consumers lower-cost options depending on which debit or credit card they use.

If the settlement is approved, consumers will ultimately benefit from lower prices, Attorney General Eric Holder said in a statement, citing several examples. “If you use a preferred lower-cost credit card, an airline could offer you more miles or a merchant could provide you with a rebate,” he said.

Holder also cited American Express as maintaining the industry’s “most-restrictive merchant rules” and “highest fees” of any credit-card company. “They refuse to give merchants the ability to offer rewards to consumers who use a less-expensive card, or even to promote information to consumers about the costs of using American Express’s cards,” Holder said.

For all the benefits the settlement might bring, consumer advocate and watchdog Edgar Dworsky of the non-profit ConsumerWorld.org is concerned that it could also lead to “mass price confusion.”

Warns Dworsky: “We are likely to start seeing many prices for the same item.  Pay with a vanilla credit card, pay $x. Pay with a premium credit card, pay $x + 1%. Pay with a debit card, pay $y.  Pay with AMEX instead of Visa, pay $x+2%.  Pay with debit card and signature, pay $Z; use PIN and pay $z minus 1%.

“This really could get confusing for customers. Disclosure will become a key issue. And even worse, this may give retailers an opportunity to bait consumers with low advertised cash prices, but charge more for using plastic (despite the fact that “surcharges” are not allowed).”

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