SACRAMENTO, Calif.–CUNA has filed an interchange brief with the Ninth Circuit Court in the case of Italian Colors Restaurant et al. v. Harris, which involves a group of merchants challenging a California state law prohibiting merchants from imposing a surcharge on buyers using a credit card.
The California Attorney General has asked the Ninth Circuit to overturn a federal judge’s March ruling that struck down the ban on surcharges and CUNA filed an amicus brief supporting the state’s position. CUNA is being represented by outside counsel in the case, Boutin Jones, Inc.
In its brief, CUNA notes there are approximately 10.25 million credit union memberships in California and that credit unions are “generally small and often struggle to compete with larger players in a fiercely competitive consumer financial services marketplace. Three-quarters of credit unions have less than $100 million in assets and the median asset size of a credit union is $24 million…By comparison, JPMorgan Chase had approximately $2.6 trillion in assets at the end of 2014.”
CUNA told the court that “consumer friendly and cost-effective card programs allow credit unions to compete with the largest financial institutions, and are vital for a credit union’s ability to attract, serve, and retain members.”
“When a credit union member makes a purchase with a credit card, the merchant is paid almost immediately, and the credit union that issued the card, underwrote the loan for the purchase, guarantees the merchant payment, and is responsible for collecting from the borrower is compensated with a small percentage of the transaction,” the brief states. “The fees constitute a merchant’s share of the substantial costs associated with this convenient payment system (and) help the credit union address the costs of maintaining a card program. The outcome of this case could have negative consequences for CUNA-member credit unions. If the California ban on surcharging is found unconstitutional, this will likely have a significant effect on the bottom-line for credit card issuing California credit unions. As described below, the member-owners of California credit unions would suffer harm, both as consumers in the general marketplace and as owners of their credit unions.”
CUNA is arguing in its brief that “to support their First Amendment and void for vagueness theories in the district court, Appellees made a variety of inventive arguments that attempted to tie the fees merchants pay for accepting credit cards to a supposed ‘state-imposed speech code,’ perpetuated by the subject statute. ER 149. As described below, these arguments are wrong in their policy conclusions, but critically, they do not advance the First Amendment and void for vagueness theories that are before this Court.”
A copy of the full brief can be found in The Gov section of CUToday.info here.