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Wal-Mart, Target Oppose Merchant Credit Card Fee Class Action Settlement
By Sarah Pierce
Target said the proposed class action lawsuit settlement would “perpetuate a broken system, restrict retailers from any future legal action and offer no long-term relief for retailers or consumers.”
Wal-Mart agreed, saying, “The proposed settlement would not structurally change the broken market or prohibit credit-card networks from continually increasing hidden swipe fees.” The company urged “all merchants to put consumers first and reject the settlement.”
Merchants have complained for years about the billions of dollars in “swipe” or “interchange fees” they’ve had to pay, which average about 2% of the purchase price. Large retailers, including Kroger Co., Safeway, Inc. and Walgreen Co., finally began fighting back in 2005 by filing price-fixing lawsuits against Visa, MasterCard and major banks. More than 50 lawsuits alleging the defendants conspired to set transaction fees arbitrarily high have been filed since then, which were consolidated in U.S. District Court in Brooklyn.
As part of the class action settlement, credit card companies have agreed to reduce swipe fees for eight months, providing a temporary reprieve on fees valued at $1.2 billion. The class action settlement does not apply to debit cards, however.
The National Association of Convenience Stores said it would fight the merchant credit card fee class action settlement because the group doesn’t think the settlement adequately addresses the issue of how much control Visa, MasterCard and banks have over merchants.
The credit card swipe fee class action lawsuit settlement is expected to go before a judge for preliminary approval later this year. A provision of the deal would allow Visa and MasterCard to back out of the class action settlement if merchants representing at least 25% of credit-card sales volume opt out of the settlement.
Updated July 31st, 2012
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