Merchants Appeal Visa/MasterCard Swipe Fee Class Action Settlement

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Hundreds of merchants, banks and health care providers have filed an appeal with the 2nd U.S. Circuit Court of Appeals, asking the appellate court to overturn a $7.25 billion Visa/MasterCard swipe fee class action settlement. They argue that the class action settlement is unlawful because it grants Visa Inc. and MasterCard Inc. “sweeping prospective immunity” from future litigation.

The plaintiffs are merchants that accept payments with Visa and MasterCard. They filed the swipe fee class action lawsuit in 2005 over the credit card companies’ allegedly anticompetitive practices that increase the “interchange” fees that merchants must pay to accept the credit cards. The plaintiffs alleged that the credit card companies conspired with banks to artificially inflate the fees. Eventually, the focus of the class action lawsuit was narrowed down to the credit card giants’ restrictions on merchants that accept their cards and their practice of imposing fees on merchants who accept their cards. The class action lawsuit encompassed a broad range of merchants, from nationwide chain stores to individual food carts.

The Visa/MasterCard swipe fee class action settlement was approved in December 2013 over the objections of thousands of merchants and other retailers. It is believed to be the largest antitrust class action settlement in history. The objectors were concerned that the class action settlement failed to address Visa and MasterCard’s dominance in the credit card industry.

The swipe fee class action settlement grants cash as compensation for past damages to the “opt-out” class of merchants that accepted Visa or MasterCard in the past. The swipe fee settlement also creates a “non-opt-out” class of merchants that have accepted Visa or MasterCard at any time after Nov. 28, 2012.

The objecting merchants noted that the non-opt-out class includes around 12 million merchants and essentially shields Visa and MasterCard from any future antitrust claims from the Class Members, despite any major advances in technology or other changes in circumstance. It also prohibits the merchants from pursuing their own monetary damages. According to the objectors, these Classes encompass merchants who currently operate businesses as well as merchants who may operate businesses that accept credit cards at any time in the future.

“Unless reversed, the district court’s class-certification ruling in this case will inaugurate a new and dangerous model for settlement class actions,” the objectors wrote in their appeal of the class action settlement. “The settlement approved below forces a diverse collection of tens of millions of Class Members to release a wide array of individualized monetary claims against the defendants.”

The objectors note that the U.S. Supreme Court has prohibited class action settlements from infringing on Class Members’ right to opt-out of a settlement in order to pursue an individual claim against the defendant. “But the purpose and effect of this settlement is to evade that established rule: It creates contrived opt-out and non-opt-out classes, represented by the same lawyers and class representatives, in order to require all the members of the larger, non-opt-out class to release all of their claims,” the objectors wrote.

According to the Settlement Administrator’s website, Claim Forms for the Visa/MasterCard swipe fee settlement will not be available until all appeals are resolved. Further information about the class action settlement was not immediately available.  Keep checking TopClassActions.com or sign up for our free newsletter for the latest updates. You can also mark this article as a “Favorite” using your free Top Class Actions account to receive notifications when this article is updated.

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

UPDATE: On June 30, 2016, the 2nd U.S. Circuit Court of Appeals rejected a $7.25 billion antitrust settlement with merchants over Visa and MasterCard’s swipe fees, finding that merchants who accept the cards after the settlement is finalized would not be adequately represented in the deal.

UPDATE 2: On Dec. 1, 2016, merchants seeking to wrap up a credit card swipe fee class action settlement are appealing their case to the U.S. Supreme Court.

UPDATE 3: June 2018, 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.

UPDATE 4: On Sept. 18, 2018, Visa, MasterCard, and numerous banks including Bank of America, Barclays, JPMorgan Chase, Citibank, and SunTrust Bank, have reached a new $6.2 billion settlement deal to resolve a massive antitrust swipe fee multidistrict litigation.

UPDATE 5: On Jan. 24, 2019, a New York federal judge preliminarily approved a massive Visa, Mastercard swipe fee settlement, which would add an additional $900 million for merchant Class Members.

UPDATE 6: 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.