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Merchants Sue Banks Over Transaction Fee

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From Associated Press

Several of the nation’s largest banks, including Citigroup Inc.’s Citibank and Bank of America Corp., illegally fix the price of credit card transaction fees, a group of small businesses charged Thursday in a lawsuit.

The suit concerns the fees charged by banks to merchants each time a customer makes a purchase using a MasterCard or Visa card, and charges that there is no limit on the banks’ ability to set the exorbitant fees.

In a statement, a Visa spokesman said the company planned to “vigorously defend” its use of the so-called interchange fees, which it called “a practice that has been successful in the marketplace as well as upheld as legal and necessary in federal court.”

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Filed in federal court in Connecticut on behalf of five businesses in California, Minnesota and Connecticut, the suit seeks to represent the nation’s retailers as a class. It asked the court to end what it called the banks’ anti-competitive behavior and award damages, which an attorney for the plaintiffs said could reach tens of billions of dollars.

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