When you grab some quick cash from an ATM, you expect to pay a fee. The size of that fee depends on whether the ATM is operated by your banking network or by a competitor. When you use a competing network, both that network and your own bank can charge you a fee. Of course, you might not have to pay any fee for money withdrawn from their own bank's ATMs. Are those rules clear enough?
If paying these fees infuriates you, you may have wondered why they never seem to go down over time. We would expect healthy competition to drive down excessive fees over time. We might even expect to see banks and credit card processors to cut fees from time to time in heavily advertised promotions. Or we might expect our banks to protect us from outrageous fees.
Why hasn't any of that happened? One theory is that we're not seeing healthy competition in this market. In fact, consumer class actions have been moving through the courts claiming that Visa and Mastercard made secret agreements to manipulate the fees while keeping competitors from undercutting them.
Bank of America, JPMorgan Chase and Wells Fargo were also named in the antitrust complaints because they allegedly engaged in this anticompetitive behavior when they owned Visa and Mastercard, and because rules created by the credit card companies tended to benefit the big banks.
The antitrust claims have stumbled through the courts. Initially blocked by a trial judge, the cases were revived last year by the D.C. Circuit Court of Appeals. The U.S. Supreme Court then agreed to take up the cases, and consolidated oral arguments had been scheduled for Dec. 7.
Yesterday, the Supreme Court issued a surprise order dismissing two of the cases -- leaving the D.C. Circuit Court's order in place. In other words, it allowed the class actions to move forward. The reason? According to the order, Visa made one argument in its legal brief asking the high court to review the cases, then changed its argument once review was granted.
Whether the case involves commercial litigation or another type of dispute, the courts frown on litigants changing their arguments in mid-stream. Visa lost its opportunity for a definitive end to the consumer class actions and will need to begin preparing for court.