Inside This Issue - News
Credit card settlement draws new fire from retailers
June 17th, 2013
NEW YORK – A number of retailers and trade associations have rejected the proposed settlement of a class-action lawsuit over credit card companies’ swipe fees, while a group of 17 retailers have filed a new lawsuit against Visa Inc. and MasterCard Inc.
The original suit was filed in 2005, and the proposed settlement received tentative approval from a U.S. district court judge last November. A hearing on final approval is scheduled for September 12.
The National Retail Federation (NRF) filed a brief with the U.S. District Court in Brooklyn dismissing the settlement as “surrender” and contending that it fails to address the monopolistic power to fix fees that Visa and MasterCard enjoy while stripping retailers of their right to take future legal action.
“It gives the credit card networks carte blanche to set and manipulate interchange rates going forward without fear of future private suits,” the brief states.
A group of 19 major retailers, including Walmart, Costco Wholesale Corp. and GNC, announced that they have individually decided to opt out of the proposed $7.25 billion settlement. Members of the group are considering additional legal action to recover damages from Visa and MasterCard under federal antitrust laws.
“If this settlement is approved, it would allow credit card companies and big banks to perpetuate an unfair and broken system that costs all consumers,” said Mike Cook, senior vice president of finance and assistant treasurer for Walmart. “Additionally, we object that the proposed settlement would require merchants to release future claims against the credit card networks covering rules we’ve never seen and conduct that has yet to occur.”
Another group of 17 retailers that includes Target Corp., Macy’s Inc., J.C. Penney Co. and Big Lots Stores Inc. has filed suit against Visa and MasterCard in U.S. District Court in Manhattan. The new suit alleges that the credit card companies illegally restrain competition for interchange fees by setting default rates and imposing almost identical rules for accepting cards.
Meanwhile, Visa, MasterCard and a number of banks requested that the judge handling the settlement case declare that interchange fees are lawful.