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|Objections to $6 Billion Visa-MasterCard "Swipe" Fee Settlement Mount|
- Monday, 15 October 2012 11:39
Objections to $6 Billion Visa-MasterCard "Swipe" Fee Settlement Mount
By Matt O'Donnell
A group of retailers and trade groups has launched a last-ditch effort to stop the $6 billion class action lawsuit settlement that Visa, MasterCard and major banks have agreed to pay retailers for alleged fee fixing, according to the Associate Press.
Over half of the 19 retailers and trade groups that are Plaintiffs in the credit card fee class action lawsuit say they’re trying to block the proposed class action settlement deal because they believe it would allow the credit card companies to continue to take advantage of merchants and their customers while stopping competition.
The proposed merchant credit card fee settlement, disclosed in July, is supposed to resolve an antitrust class action lawsuit alleging the credit card companies conspired to fix merchants’ fees for accepting credit cards. Retailers alleged the collusion resulted in a monopoly, and forced merchants to pay billions of dollars in “swipe” or “interchange” fees that continue to grow each year and drive up costs for consumers.
Visa, MasterCard and 13 of the country’s largest banks, including JPMorgan Chase, Bank of America, Citibank, Wells Fargo, Capital One and others, agreed to establish a class action lawsuit settlement fund of $6.05 billion to pay approximately 7 million merchant claims.
In addition, Visa and MasterCard agreed to reduce swipe fees that would otherwise be paid by merchants on Visa and MasterCard credit card transactions over an eight-month period while the new rules are implemented. The value of these reduced “swipe” fees is estimated at approximately $1.2 billion, and should result in lower prices for consumers.
The deal, however, has suffered harsh criticism from retailers and advocacy groups who call it a “mirage” that doesn’t go far enough, because it doesn’t stop swipe fees from continuing to rise, which will hurt both retailers and shoppers. In addition, the credit card fee class action settlement will prevent any future legal challenges.
"There is strong concern among our member companies that the proposed settlement will not achieve the litigation's most critical goal — to fundamentally change a broken marketplace in which swipe fees are set," said Dawn Sweeney, president and CEO for the National Restaurant Association, one of the plaintiffs opposing the settlement. "We don't expect any settlement to address every flaw of the current system, but we cannot allow it to lock in the worst elements."
Objections from thousands of merchants not included in the class action lawsuit settlement have also been lobbied, including major retailers such as Wal-Mart and Target.
The proposed credit card fee class action lawsuit settlement is expected to be submitted to the U.S. District Court in Brooklyn by October 19. Merchants objecting to the deal will then have 30 days to submit arguments urging the court to reject the proposal.
The case is In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, Case No., MD-05-1720 (JG) (JO), Eastern District of New York.
Updated October 15th, 2012
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Last Updated on Thursday, 27 December 2012 11:09