GRA RECOGNIZES LEGISLATORS
GOING OUT OF BUSINESS SALES BECOME AN ISSUE IN GEORGIA
RECESSION HIT STATE HARDER
GRA CAPITOL HILL ADVOCACY
• Bill Requiring Visa/MasterCard to Negotiate Hidden Credit Card Fees
• President Obama Signs Credit Card Reform Legislation Into Law
HAPPY 35TH BIRTHDAY BAR CODE
QUOTE TO PONDER

GRA Recognizes Legislators

On Monday, June 1, 2009 the Georgia Retail Association, at its annual conference, named Representative Tom Graves as its 2009 Representative of the Year, and Senator Chip Rogers as its 2009 Senator of the Year.

Tom Graves, a republican from Ranger, Georgia was the sponsor of two significant pieces of legislation during the 2009 session of the Georgia General Assembly. HB 481, the “Jobs Act of 2009” and HB 482, the elimination of the state inventory tax, both were designed to help the state’s businesses survive in difficult economic times. While HB 481 was vetoed by the governor it included a number of key provisions for the state’s retailers. One important provision of the bill would have ended the requirement of having merchants estimating their sales tax obligation in advance of collections, and remitting those sales taxes before they were ever realized. In these days of tight credit and small or negative profits, cash flow is compromised by the existing law. Georgia is one of the few states that have this unusual requirement.

Chip Rogers, a republican from Woodstock, Georgia was instrumental in the passage of several key pieces of legislation during the 2009 session of the Georgia General Assembly. HB 481, the “Jobs Act of 2009” and HB 482, the elimination of the state inventory tax, and HB 120, the Sales Tax Holiday, were moved through the Senate by Senator Rogers.

Going Out of Business Sales Become An Issue In Georgia

The Georgia Govenor’s Offcie of Consumer Affairs is cracking down on retailers who mislead consumers by running seemingly endless going-out-of-business sales.

Georgia law says such sales may not last more than 90 days, and that at the end of that period, the store can no longer operate that business at that location.

The agency’s administrator, Joe Doyle, said the illegal sales “hurt ethical businesses by drawing away customers who are responding to false promises of price reductions and time-limited bargains.”

Recession Hit State Harder Than Most - Statistics Show Georgia’s Economic Contraction In ‘08 Among Worst In U.S.

The numbers released Tuesday, June 3, 2009 confirmed just what many Georgians believe: the state took a harder-than-average hit from the recession last year, shrinking at a more painful rate than most of its neighbors.

While losing 3.4 percent of its jobs during 2008, Georgia’s economy contracted 0.6 percent, among the worst performances in the United States, according to the Bureau of Economic Analysis.

In the Southeast, Georgia and Florida had the only shrinking economies last year. When the housing bubble burst, both states hemorrhaged jobs in real estate —- accountants and attorneys, as well as brokers and builders.

Georgia shed 3.4 percent of its jobs during the year, a painful flow that has continued into this year. But the litany of loss in Georgia included manufacturing —- where exports were hammered by global recession —- as well as finance and insurance.

Manufacturing employment has been declining for a decade and now accounts for slightly less than 10 percent of the state’s jobs. But the continued contraction accounts for nearly one-quarter of the recession’s job loss, according to Don Sabbarese, director of the Kennesaw State Econometrics Center.

Since slipping into recession in late 2007, Georgia’s job loss has come proportionally faster than national average, though data in recent weeks has spurred hope that the plunge in Georgia’s economy has slowed.

Despite a negative fourth quarter, the U.S. economy ended the year with 0.7 percent growth, the BEA said. In 2007, the economy expanded 2 percent.

Georgia tied with Indiana and Arizona for seventh-worst economy. To the north, the Carolinas expanded modestly. Even next door Alabama squeezed out growth, despite losing 2.9 percent of its jobs, last year.

Bill Requiring Visa/MasterCard to Negotiate in Hidden Credit Card Fees

On Thursday, June 4, 2009 H.R. 2695, the Credit Card Fair Fee Act of 2009 was introduced in the U.S. House of Representatives. The legislation, if enacted, would require Visa and MasterCard to negotiate over hidden credit card processing fees that cost the average household more than $400 a year.

The bill, sponsored by House Judiciary Committee Chairman John Conyers, a Democrat from Michigan, would require Visa and MasterCard banks to negotiate with merchants on “interchange” fees that are currently imposed on merchants on a take-it-or-leave-it basis.

Interchange is a fee averaging close to 2 percent that Visa and MasterCard banks charge merchants every time a credit card is used to pay for a transaction. Visa and MasterCard effectively force merchants to pass the fees on to consumers by requiring them to be included in the advertised price of merchandise and making cash discounts difficult. Interchange is largely unknown to most consumers because Visa and MasterCard keep merchants from disclosing it on receipts and don’t disclose the fees on consumers’ monthly statements.

Interchange collections totaled $48 billion in 2008, up from $16.6 billion in 2001. The higher prices that result from the fees cost the average household an estimated $427 last year, up from $159 in 2001.

Please contact members of Georgia’s Congressional delegation to urge their support of H.R. 2695.

President Obama Signs Credit Card Reform Legislation Into Law

On May 22, President Obama signed into law the Credit Card Accountability Responsibility and Disclosure Act of 2009, legislation that reforms credit card practices and which passed the House of Representatives by a margin of 361-64 one day after the Senate passed the legislation by a vote of 90-5. The new law codifies much of what was included in Federal Reserve’s Regulation Z, which incorporated a number of recommendations made by RILA and our member companies to the Federal Reserve. The legislation will become effective nine months after enactment.

Key Provisions of Legislation

Some key provisions of the legislation include: a prohibition on arbitrary interest rate increases and universal default on existing balances; a requirement that promotional (or “teaser”) rates to last at least six months; a requirement that payments made in excess of the minimum to be applied first to the credit card balance with the highest rate of interest; a prohibition on interest charges on debt paid on time (also known as “double-cycle billing” ban); a requirement that cardholders be given 45 days notice of interest rate, fee and finance charge increases; a requirement that issuers disclose the period of time and total interest it will take to pay off the card balance if only minimum monthly payments are made; and increases existing penalties for companies that violate the Truth in Lending Act for credit card customers.

Gift Cards

Title IV of the bill places new restrictions on expiration dates and fees associated with gift certificates, store gift cards, and general-use prepaid cards. The gift card provisions become effective 15 months after the bill’s enactment.

Specifically, the provision states that it is prohibited to charge a “dormancy fee, an inactivity charge or fee, or a service fee with respect to a gift certificate, store gift card, or general-use prepaid card” UNLESS the card has been dormant for at least one year and no more than one fee is charged per month. Such fees may only be charged if certain disclosure requirements, as prescribed in the legislation, are met. In addition, the bill prohibits the issuance of gift certificates, store gift cards, or general-use prepaid cards that have expiration dates unless they are at least five years after the gift certificate was issued, or the date on which card funds were last loaded to a store gift card or general-use prepaid cards.

Interchange Rate Study

As originally drafted, a proposed amendment to the bill would have allowed retailers to offer discounts for cash, check and debit transactions by prohibiting banks and credit card networks from imposing restrictions and fines on retailers. The amendment would have also allowed retailers to steer customers or offer discounts for using low-fee cards versus high-fee cards. Finally, the amendment would have directed the Federal Reserve to collect information on interchange rates every two years and publish and make available that information to the public.

After some back and forth between the amendment sponsors and bill negotiators, the amendment was paired back somewhat by removing the Federal Reserve study as well as the ability to offer discounts for certain credit cards.

Consumer groups for the first time went on record supporting legislative action on interchange fees. The Consumer Federation of America, the Consumers Union, the National Consumer Law Center and U.S. Public Interest Research Group wrote a letter to the entire Senate asking senators to support the Durbin-Bond amendment. The letter discusses in detail how high interchange rates are passed along to consumers, and advocates for allowing retailers to provide discounts for debit or cash payments. However, the letter also stipulates that “in order to ensure that consumers actually benefit from this proposal, it is important that Congress and the GAO closely monitor whether and how much of the savings that merchants receive from the debit card usage are passed through to the consumers in the form of discounts and lower prices.”

Notwithstanding the fact that the Durbin-Bond amendment was not agreed to, the underlying bill contains a provision (Sec. 501) directing the Government Accountability Office to “conduct a study on use of credit by consumers, interchange fees, and their effects on consumers and merchants” and report back to Congress within 180 days of the bill’s enactment on its findings. That report will now be due back to Congress sometime around December of this year.

Happy 35th Birthday Bar Code

The humble bar code turns 35 this week. A collection of black stripes on merchandise sold over retail counters has changed the world. The most obvious benefit of bar coding is that consumers need to spend less time at check-out counters, waiting for their bills to be manually prepared. These days, it takes a few swipes over a bar code reader to do the trick.

Bar coding has helped retailers and manufacturers keep a close eye on sale patterns in real time, knowing exactly when to stock up or run down inventory. That has led to a radically new world of efficient supply chains and tight inventory management. Businesses have become more flexible.

QUOTE TO PONDER

“Today, … it cannot be repeated too often that the Constitution is a limitation on the government, not on private individuals – that it does not prescribe the conduct of private individuals, only the conduct of the government – that it is not a charter for government power, but a charter of the citizen's protection against the government.” Ayn Rand


Thank you,

John C. Heavener, MSM, CAE
President, Georgia Retail Association

For More Information Contact:
johnh@georgiaretail.org
Telephone – 770-484-3449, ext. 21
Toll Free - (877) 427-3824
Fax – 770-484-5727
www.georgiaretail.org

About GRA: The Georgia Retail Association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, and grocery stores has been serving the state’s business community since 1961. The Georgia Retail Association represents an industry with more than 71,300 retail establishments, and more than 715,000 employees - about one in five of Georgia’s workers – with annual sales of more than $115 billion.

Printer Friendly CRR June 5, 2009