NEW YORK -- In a decision that could lead to more litigation against the nation’s largest credit-card companies, a federal court of appeals overturned the class-action settlement involving retailers who sued Visa and MasterCard over high interchange fees.
As reported in a McLane/CSP Daily News Flash, the Second Circuit Court of Appeals in New York overturned the class-action settlement in the case titled, “In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation.” That case led to a proposed settlement valued at $7.25 billion in 2012. Yesterday’s ruling called the settlement “unreasonable and inadequate.”
Though the settlement was the largest in U.S. history in 2012, Alexandria, Va.-based NACS led efforts to oppose it because officials said the relief it offered was inadequate and the statements absolving the credit-card companies were overly broad.
In a press release, NACS officials said the association both opted out and objected to the proposed settlement because it offered class members money damages of only about two months’ worth of interchange fees and, among other things, limited modifications to Visa’s and MasterCard’s surcharging rules. The proposed settlement also required class members to release Foster City, Calif.-based Visa and Purchase, N.Y.-based MasterCard from liability for any anticompetitive rules currently in place, including the interchange or swipe-fee rules, and any “substantially similar rules” instituted at any time in the future.
In addition to NACS, the majority of named plaintiffs and approximately 1,200 additional merchants and retailer groups filed papers objecting to preliminary approval of the proposed settlement, according to the release.
A spokesperson for Visa said they still are reviewing the verdict and declined to comment. MasterCard officials did not respond by press time.
The convenience-store industry pays $10 billion annually in credit-card fees, according to the NACS State of the Industry Report of 2015 Data.
“We are pleased that the Second Circuit Court of Appeals has thoughtfully addressed the problems we have long identified with this proposed settlement,” said Henry Armour, president and CEO of NACS. “We will work to help ensure that this moves forward in a way that recognizes the best interests of merchants and the consumers they serve.”
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