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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 charge in a lawsuit. “For the average consumer, you have to pay $200 to $300 per year in additional costs for merchandise, whether you pay with plastic or in cash,” said K. Craig Wildfang, an attorney at the Minneapolis-based firm representing the plaintiffs, on Thursday. “It’s like an invisible 2 percent sales tax on everything you buy.” 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. Paul Cohen, a vice president at Visa USA, said the company plans to defend the fees as a business practice that has been both successful in the marketplace and found to be legal in federal court. “Visa operates in a highly competitive marketplace, which drives enormous benefits to consumers,” he said. “Our rates are determined in the open marketplace, and we believe that the marketplace is the best arbitrator of price, not a courthouse.” Filed Wednesday 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’ anticompetitive behavior and award damages, which Wildfang said could reach tens of billions of dollars. “There is absolutely no need for these fees to be so high, and without anything to control them, the banks and the credit card companies continue to find ways to escalate the fees,” said plaintiff Mitch Goldstone, president and chief executive of 30 Minute Photos Etc. and 30minphotos.com, a national online boutique photo service, in a statement released by Wildfang’s law firm. Among those named in the lawsuit are Charlotte-based Bank of America and Wachovia Corp., as well as Citigroup and JPMorgan Chase & Co. and other leading banks. Visa and MasterCard are also named. Bank of America spokeswoman Shirley Norton said the bank had not been served with the lawsuit and could not comment. A Wachovia spokeswoman said the bank does not comment on pending litigation, and messages left at MasterCard were not immediately returned. Citigroup issued a statement Thursday afternoon saying it “denies that it engaged in any unlawful conduct as alleged in the complaint and will vigorously defend the lawsuit.” In 2003, Wal-Mart Stores Inc., the world’s largest retailer, negotiated a multibillion-dollar settlement with Visa and MasterCard over the use of the fees. Other large retailers, such as Home Depot Inc. and Best Buy Co., have either won fee cuts or are in talks to do so, according to The Wall Street Journal, which first reported details of the lawsuit. But Wildfang, who said regulatory authorities in many other countries have adopted measures to control the fees, said prior legal actions in the United States didn’t address the core problem — the enormous marketing power of Visa and MasterCard. “This case is aimed at solving that problem by prohibiting them from doing it,” he said. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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