April 01, 2010
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News: Vermont Gives Sm Businesses Protection
Vermont's lawmakers are sending a strong message to credit card companies with the state's new Senate Bill 138. Peter Shumlin (D-Windham), State Senate President, introduced the bill which limits lenders' abilities to impose unfair interchange fees and penalties. Unlike the nation's Credit CARD Act 2009, Senate Bill 138 gives added protection to businesses as well as consumers. Not only will the bill give added credit card interchange fees, it relaxes card restrictions.
Under the terms of the new bill, credit card companies will no longer have the freedom to raise fees to unfair heights; the bill caps the amount lenders can charge. Lenders will also be required to provide customers' with written notice in advance of any rate change, fee change, or changes in the credit card's terms and conditions. Violators will receive a fine up to $10,000 per violation. An amendment to the bill was drafted to include protection for small businesses. The amendment includes small businesses and prohibits lenders from charging businesses fines for participating in a number of operating activities. Small businesses have been asking for the right to determine which cards they will accept for consumer payment; however, contract terms have forbidden it. Under the new law, Vermont businesses will not have the right to choose which cards they will or will not accept.
The bill is supported by the Vermont Retail Association, the Vermont Grocers Association, and the Merchants Payments Coalition that advocate for the rights of small business owners as well as large mass merchants. Credit card companies have received a great deal of criticism over the unfair and excessively high payment processing fees called interchange fees. Card interchange fees have been reported as the highest line item expense for retailers. In 2001, these fees cost U.S. retailers nearly $16 billion. It is estimated that it has risen to over $48 billion over the past year.