Visa, MasterCard Near Swipe Fee Class Action Settlement

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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.

This week, the Supreme Court ruled that American Express did not violate antitrust laws by not allowing merchants to discourage customers from using their American Express card due to the high fees associated with the card.

This ruling has set a pivotal precedent for a different Visa, MasterCard class action lawsuit that was originally filed in 2005, and was appealed to the Supreme Court in 2016.

In the MasterCard, Visa antitrust class action lawsuit, a group of merchants alleged that banks and credit card companies unlawfully entered into agreements to raise fees that merchants pay when customers make transactions using a credit or debit card.

The merchants alleged that Visa, MasterCard, and 13 of the country’s biggest banks, including Bank of America, Citibank, Capital One, JPMorgan Chase, and others conspired to raise fees. The credit card companies and banks are expected to reach a settlement deal with the merchants by mid-July.

Based on this new ruling, it will be possibly be harder for merchants to claim that credit card companies are engaging in antitrust agreements. In the case of credit card companies, antitrust agreements are agreements between companies to keep fees at a certain rate, hiking fees for customers and merchants across the market, thus decreasing competition.

Since the beginning of settlement talks for the Visa, MasterCard swipe fee class action lawsuit, the settlement has faced significant opposition from retailers. 

The retailers who opposed the settlement deal argue that the settlement would allow credit card companies to continue to collude to stop competition and take advantage of businesses and customers while raising fees.

The terms of the current settlement remain unknown, though opposition to previous iterations of the settlement went beyond the price tag. In 2012, proposed terms of the Visa MasterCard settlement reportedly would require the company to reduce swipe fees for eight months.

However, critics said that this proposal was merely a “mirage” that wouldn’t have a lasting effect on fees, which would allegedly continue to rise and hurt retailers and consumers.”

In light of the Supreme Court decision over the AmEx class account lawsuit, experts suspect that merchants attempting to litigate antitrust claims will believe they have less leverage, as the ruling has strengthened credit card companies’ place in the card payment market.

The merchants are represented by Jeffrey I. Shinder, A. Owen Glist, Taline Sahakian and David A. Scupp of Constantine Cannon LLP, James A. Wilson, Kimbery Weber Herlihyj and Alycia N. Broz of Vorys Sater Seymour & Pease LLP, Stephen R. Neuwirth and Steig D. Olson of Quinn Emanuel Urquhart & Sullivan, H. Laddie Montague, Merrill G. Davidoff and Michael J. Kane of Berger & Montague PC, K. Craig Wildfang, Thomas J. Undlin and Ryan W. Marth of Robins Kaplan LLP, Patrick J. Coughlin, Joseph David Daley and Alexandra Senya Bernay of Robbins Geller Rudman & Dowd LLP, among others.

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

UPDATE: On Sept. 18, 2018, Visa, MasterCard, and numerous banks including Bank of America, Barclays, JPMorgan Chase, Citibank, and SunTrust Bank, have reached anew $6.2 billion settlement deal to resolve a massive antitrust swipe fee multidistrict litigation.UPDATE 2: On Jan. 24, 2019, a New York federal judge preliminarily approved a massive Visa, Mastercard swipe fee settlement, which would add anadditional $900 millionfor merchant Class Members.UPDATE 3: 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.