Small-business owners slam AmEx over Excessive Fees, Tax Dodging
A fact sheet on American Express’s abusive behavior toward small businesses and on the company’s tax dodging is available here
The Main Street Alliance, a national network of small-business owners, is denouncing the hypocrisy of American Express for championing small-business shopping on the Saturday after Thanksgiving, while the credit card giant’s financial and tax practices hurt Main Street businesses every day.
Now in its fourth year, “Small Business Saturday” is the marketing invention of American Express, encouraging consumers to “Shop Small” the Saturday after Thanksgiving by using their American Express cards at participating businesses. American Express launched the marketing initiative just a month after the U.S. Justice Department filed an antitrust lawsuit against the company in 2010.
Small-business owners criticize the company for imposing the credit card industry’s highest “swipe fees” at 3.5 percent, and for its record of tax dodging that includes stashing $8.5 billion in profits offshore, which are not currently subject to U.S. taxes.
The Main Street Alliance encourages consumers to support small businesses this holiday season by shopping locally and paying for their purchases with cash.
But, American Express? Leave home without it.
Big bank lobbyists have been putting on a full-court press in Washington, DC to roll back components of the financial overhaul passed last year and free Wall Street to go back to the "business as usual" that led to the financial crisis in 2008.
The bankers are gunning for the new Consumer Protection Bureau and attempting to block the confirmation of a director for the bureau. They're lobbying to starve regulatory agencies of the funds needed to enforce the provisions of the new law. And on the Senate floor on June 8, they went after small businesses with an amendment to delay (read, kill) new rules limiting debit swipe fees. But this time, the bankers lost.
The bank-backed amendment needed 60 votes to pass, and it fell six votes short on Wednesday (see the roll call of the vote – no party line vote here, unless you draw the lines of a new "Party of Wall Street"). This vote was a big win for small businesses, stopping big banks and the card company duopoly from walking away with an extra $1 billion a month in exorbitant swipe fees.
Leaders in the Main Street Alliance led the charge of small businesses fighting back against the banks' lobbying onslaught. While the inside-the-beltway small business lobbies (like the NFIB) sat on the sidelines, MSA business owners made calls, signed letters, and organized their business contacts to make their voices heard.
Mike Craighill, owner of the Soup and Such restaurants in Billings, Montana wrote an op-ed in The Hill on June 9 recapping the victory. Mike wrote:
As the owner of two family restaurants that cater to a daytime business clientele, I know a thing or two about serving up a good lunch. And, in the run-up to Wednesday's Senate vote on the amendment to delay new rules limiting debit swipe fees, I had a sinking feeling in the pit of my stomach that big banks were going to eat our lunch… again.
But, to my surprise and delight – and thanks in large part to small business owners from Maine to Iowa to Washington State who contacted their Senators and make their voices heard - Wall Street bankers didn't win this time. They didn't eat our lunch.
MSA leader Mary Noel Black, owner of The UPS Store at Citiplace in Baton Rouge, Louisiana had this to say reflecting on the significance of the vote:
The massive transfer of wealth from our local economies, from places like Greeley, Colorado and Baton Rouge, Louisiana, to the Manhattan penthouses of bank executives has been slowed. This vote confirms that the new swipe fee limits will move forward, and small businesses will be freed from exorbitant interchange fees that have hindered our ability to grow and create jobs.
The Senate's vote also confirmed that it’s possible to stand up to the big banks and win… and that small businesses banding together and making their voices heard are a force to be reckoned with.
The country observed National Small Business Week in May (see the Presidential Proclamation). The Main Street Alliance marked the occasion by releasing its “State of the Small Business Nation – 2011.” This white paper includes a “Small Business Top Ten List” of concrete policy opportunities to level the playing field for small businesses and help them create jobs.
While pundits and politicians like to label policies “pro-business” or “anti-business,” as if there were one unified business interest, the reality is that policies that make winners out of some businesses make losers out of others. As Bruce Josten, the chief lobbyist of the U.S. Chamber of Commerce, put it, “You’re never going to have one hundred percent unanimity. Never. There is inherent tension… I laugh every day when someone calls and asks what does the business community think.” (1)
While Mr. Josten pointed to tensions between oil and gas companies, wholesalers and retailers, investment banks and retail banks – all big corporate players – his point applies even more so to the dynamics between big business and small business. While pundits and politicians like to lump all business interests together, the truth is that policies that benefit large corporate players very often tilt the playing field against small businesses.
In a cover letter to President Obama, senior administration officials, and congressional leaders on May 18, Main Street Alliance business leaders wrote:
Our members come from states across the country and a wide range of sectors, but we are united by a common set of values – small business values. We believe in what we do, we stand by our products and services, and we want people in government and corporate leadership who do the same. We stand for fair play and a level playing field. We stand for having each other’s backs. We believe America’s future prosperity depends on everyone contributing their fair share.
These small business values are what guide our business decisions and our commitment to advancing policies that fulfill the promise of an economy that works for all of us – small businesses, our employees, and the communities that sustain us.
(1) James Verini, “Show Him the Money,” Washington Monthly, July/August 2010, http://www.washingtonmonthly.com/features/2010/1007.verini.html
On May 19, Main Street Alliance members from Louisiana and Maine were joined by Senator Dick Durbin on a conference call highlighting the disproportionate impact of debit card swipe fees on small businesses. Rules limiting swipe fees, passed last year and set to go into effect this summer, are now under attack from the banking lobby, with an amendment under consideration to delay the rules from taking effect for up to 24 months.
Here are a sampling of quotes from speakers on the call:
Mary Noel Black, owner of The UPS Store at Citiplace in Baton Rouge, LA:
“This system is broken and small businesses are paying the price in constantly increasing debit swipe fees. Small businesses have the least leverage, the least ability to negotiate with the big banks and the card companies, so we end up with the worst contracts.
“Those who say they want to delay and study this issue, are really only paving the way for these much-needed swipe fee limits to die a quiet death. Every month of delay on the new swipe fee rules is another $1.3 billion bailout to the banks – delaying 15 months translates into another $15-20 billion gift to the banks, paid for off the backs of small business owners like me.”
Rita Moran, owner of Apple Valley Books in Winthrop, ME:
“Swipe fees are uneven, unfair and it’s absurd! This issue pits one business against another and the customers are caught in the middle. Every day I have customers come in, hand me their debit card and say they want to use it as a credit card because the banks told them to. This is divisive. Beyond the dollars and cents issue, this is a community issue.”
Senator Dick Durbin, Assistant Senate Majority Leader:
“The swipe fee issue is a very important issue for small businesses across America. These are tough times. I’ve heard so many speeches on the floor of the Senate – by both political parties – about how we need to stand behind small businesses because they are the job creators of America. Moving the new swipe fee rules forward is a key opportunity to do that.
“Last year, we got a bipartisan vote of 47 Democrats and 17 Republicans to set the Federal Reserve on the path to establishing reasonable interchange fees. Swipe fees account for $1.3 billion each month, the lion’s share of that going to the biggest banks on Wall Street. We want to end the price fixing by the card companies, end this rip-off of consumers and small businesses by making sure these fees are reasonable.
“The next two weeks are a critical moment for this issue as we wait for the Federal Reserve to announce the rule in the first part of June. We’ll get to look at the rule, dispel rumors about what the rule will do, and then we can move forward from there to implement the rule by the July 21st deadline and ensure fair treatment for all of our small businesses.
“I encourage small business owners in every state to be in touch with your Members of Congress and let them know that this is a critical issue for the growth and expansion of small businesses across America.”