Will That Be Cash or Credit? Will That Be Cash or Insurance?

This past Monday, the U.S. Department of Justice sued MasterCard, Visa and American Express for anti-competitive practices, reaching a proposed settlement with two of the defendants, MasterCard and Visa. As of this writing, American Express vowed to fight on, arguing that the proposed settlement will promote steering and do nothing to promote competition.

I personally find this very interesting to say the least. But more importantly, can a parallel be drawn to the practices that are commonly used within the auto glass repair and replacement (AGRR) industry? Louise Parent, the attorney for American Express, was quoted as saying the contracts are “intended to shield consumer from pressure by merchants not to use the cards of their choice.” Just what are the objectives of the contracts between insurance companies and their third-party administrator (TPA) partners?

Do the contracts in existence in the AGRR industry between insurers and TPAs promote competition and facilitate a shop’s equal access to the consumer? I would have to argue that they do not. I will not address the particulars that support my argument as I have many times before. To proclaim that TPAs promote competition and facilitate equal access to the marketplace in the AGRR industry is ludicrous and only a fool would buy into it. To argue that the TPA model benefits the consumer is just as empty. The only ones that can argue in favor of the TPA practices are the ones who are directly benefitting.

What really has piqued my interest is that the U.S. Department of Justice is on the march and serious about enforcing the rules of free and fair competition. The credit card industry is huge. But I will argue that based on what I am reading about the anti-competitive practices that brought the Department of Justice to investigate the industry pales in comparison to the practices in existence within the AGRR industry. I highly doubt that if consumers choose to pay for purchases with a MasterCard that a representative of Visa calls them on their cell phones and pressures them to do otherwise.

And to those of you who have read my blogs, I do not believe that the participants in this industry are looking for any favors to tip the scales of justice. I believe that all we desire is to have them return to a state of equilibrium. I have always said that the proof that things are amiss in the AGRR industry is the ongoing introduction of anti-steering legislation across the 50 states. Simply and without fanfare, we want the rules of engagement enforced. And in that regard, I have a project for Ms. Christine Varney, who serves as assistant attorney general for the antitrust division at the U.S Department of Justice. One call to a TPA and I am confident that she will be anxious to get started.