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Card Brands Could Pay Billions in Swipe-Fee Settlement

Retailers could be eligible to receive payment pending court approvals
Photograph: Shutterstock

NEW YORK -- Visa and Mastercard have agreed to provide approximately $6.24 billion to merchants in class-action settlement funds over excessive interchange fees, according to a notice authorized by the U.S. District Court for the Eastern District of New York. Both card companies claim innocence, and the court has not made a ruling, but the parties have agreed to the settlement, and the court has given its preliminary approval.

The relationship between payment network providers and merchants has always been contentious, especially so with convenience-store operators, whose already low margins are squeezed further by interchange or swipe fees imposed by the card brands. This potential settlement is the latest in a series of legal feuds between card brands and merchants that has been in the works since 2005.

Visa and Mastercard, separately and together with certain banks, violated antitrust laws and caused merchants to pay excessive fees for accepting Visa and Mastercard credit and debit cards, according to a press release. The net class settlement fund, after deducting court-awarded attorneys' fees and costs, will be used to pay valid claims of merchants that accepted Visa or Mastercard credit or debit cards at any time between Jan. 1, 2004, and Jan. 25, 2019.

If the settlement gains the court’s approval, and if that approval is affirmed on any appeals, every merchant that does not exclude itself from the class by the deadline described below and files a valid claim will get money from the class settlement fund. The value of each claim will be based on the actual or estimated interchange fees attributable to the merchant’s Mastercard and Visa payment card transactions from Jan. 1, 2004, to Jan. 25, 2019.

Merchants included in the lawsuit have the legal rights and options explained below:

  • Exclude themselves from the settlement class. Merchants who exclude themselves will not get any money from this settlement but can individually sue the defendants on their own at their own expense, if they want to. Merchants who wish to exclude themselves must make a written request and mail it with postage prepaid and postmarked no later than July 23, 2019, or send it by overnight delivery shown as sent by July 23, 2019, to Class Administrator, Payment Card Interchange Fee Settlement, P.O. Box 2530, Portland, OR 97208-2530.
  • Object to the settlement. The deadline to object is July 23, 2019. To learn how to object, click this link or call (800) 625-6440. Merchants who exclude themselves from the settlement cannot object to the settlement.
  • Eventually file a claim to ask for payment. To receive payment, merchants will be required to fill out a claim form. Claims cannot yet be filed. If the court grants final approval, and if that approval is affirmed on any appeals, the court will approve a claim form and set a claim deadline. Claim forms will then be mailed to all identified merchants. When the time comes to file claims, merchants can submit them via mail or email, or may file online at this link.

Members of the settlement class who do not exclude themselves by the deadline will be bound by the terms of this settlement, including the release of claims against the released parties provided in the settlement agreement, whether or not the members file a claim for payment.

On Nov. 7, 2019, there will be a court hearing to decide whether to approve the proposed settlement. The hearing also will address the requests for attorneys' fees and expenses, and awards for the class plaintiffs for their representation of merchants in MDL 1720, which culminated in the settlement agreement. The hearing will take place at the U.S. District Court for the Eastern District of New York, 225 Cadman Plaza, Brooklyn, N.Y.

Members of the settlement class do not have to go to the court hearing or hire an attorney but can if they want to, at their own cost. The court has appointed the law firms of Robins Kaplan LLP, Berger Montague PC and Robbins Geller Rudman & Dowd LLP as Rule 23(b)(3) Class Counsel to represent the Rule 23(b)(3) Settlement Class.

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