Historic Visa/MasterCard Fee Class Action Settlement is Approved

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A New York federal judge has approved what is believed to be the largest antitrust settlement in history over allegations that MasterCard Inc. and Visa Inc. conspired to fix prices for credit card swipe fees in violation of the Sherman Act. Members of the class action settlement include approximately 12 million merchants.

The Visa/Mastercard class action settlement will provide a cash recovery in excess of $7 billion to merchant Class Members and will provide for reforms to the defendants’ practices. Nearly 12 million merchants that accept Visa and MasterCard will be able to claim money from the $6.05 billion Cash Settlement Fund as long as they did not opt out of the class action settlement. Visa and MasterCard also agreed to reduce their swipe fees for eight months, which will provide an additional estimated $1.2 billion in discounts to eligible merchants.

The class action lawsuit was initially filed in 2005, and accused Visa and MasterCard of conspiring to artificially inflate their transaction fees. The litigation has subsequently been trimmed so that it currently only involves the credit card companies’ restrictions on the merchants that accept their cards and the practice of setting “swipe” fees, which are paid by merchants. The value of these swipe fees is valued at approximately $1.2 billion.

U.S. District Judge John Gleeson held a fairness hearing on Sept. 12, 2013. On Dec. 13, he granted final approval to Visa/Mastercard swipe fee settlement despite the objections of some of the nation’s largest retailers. According the order approving the class action settlement, “This case has been extensively litigated for more than eight years. Discovery, which began in 2005, included more than 400 depositions, the production and review of more than 80 million pages of documents, the exchange of 17 expert reports, and a full 32 days of expert deposition testimony.”

Although the parties agreed to the $7.25 billion class action settlement last July, it has been subject to numerous objections. In his decision to approve the class action settlement, Judge Gleeson acknowledged that the “behavior of a small number of objectors has threatened to undermine the efforts of others. Specifically, in their zeal to drum up objections and opt-outs by merchants around the country, certain merchant groups established websites that spread false and misleading information about the settlement and the merchants’ options.” As a result, the judge said he nearly held “certain entities in contempt of that injunction.”

According to Judge Gleeson, an important facet of this class action settlement is that it provides certain rights to merchants that they previously lacked. “For the first time, merchants will be empowered to expose hidden bank fees to their customers, educate them about those fees, and use that information to influence their customers’ choices of payment methods. In short, the settlement gives merchants an opportunity at the point of sale to stimulate the sort of network price competition that can exert the downward pressure on interchange fees they seek.”

A status conference regarding the next steps in the case, including distribution of settlement funds, will be held on Jan. 10, 2014. Details on how to file a claim for the Visa/Mastercard swipe fee settlement were not posted to the Settlement Administrator website at publish time for this article. Top Class Actions will update our readers as soon as claim filing instructions are available.

Class plaintiffs are represented by Robbins Geller Rudman & Dowd LLP, Robins Kaplan Miller & Ciresi LLP and Berger & Montague PC.

The Visa/MasterCard Swipe Fee Class Action Lawsuit is In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, Case No. 1:05-md-01720, in the U.S. District Court for the Eastern District of New York.

UPDATE: On June 30, 2016, the 2nd U.S. Circuit Court of Appeals rejected a $7.25 billion antitrust settlement with merchants over Visa and MasterCard’s swipe fees, finding that merchants who accept the cards after the settlement is finalized would not be adequately represented in the deal.

UPDATE 2: On Dec. 1, 2016, merchants seeking to wrap up a credit card swipe fee class action settlement are appealing their case to the U.S. Supreme Court.

UPDATE 3: June 2018, Visa and MasterCard are approaching a settlement deal over a swipe fee class action lawsuit after more than a decade of litigation. The settlement amount is estimated to be around $6.5 billion and is expected to be reached by mid-July.

UPDATE 4: On Sept. 18, 2018, Visa, MasterCard, and numerous banks including Bank of America, Barclays, JPMorgan Chase, Citibank, and SunTrust Bank, have reached a new $6.2 billion settlement deal to resolve a massive antitrust swipe fee multidistrict litigation.

UPDATE 5: On Jan. 24, 2019, a New York federal judge preliminarily approved a massive Visa, Mastercard swipe fee settlement, which would add an additional $900 million for merchant Class Members.

UPDATE 6: March 2019, a settlement website has recently been established for Class Members in the Visa, Mastercard swipe fee class action lawsuit. While Claim Forms are not currently available, the website provides an opportunity for Class Members to pre-register to receive one.