Disney class action alleges Visa, Mastercard charge high transaction fees

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Disney, Visa, Mastercard fees class action overview: 

• Who: Disney has filed a class action lawsuit against Visa and Mastercard
• Why: Disney alleges the payment companies worked together to force merchants to pay high transaction fees, in violation of antitrust laws
• Where: New York federal court

Disney has hit Visa and Mastercard with a class action lawsuit alleging the companies’ anti-competitive actions have caused merchants like itself to pay unnecessarily high fees for more than a decade.

The Walt Disney Co. filed a class action complaint against Visa Inc. and Mastercard Inc. in a New York federal court July 29, alleging violations of The Sherman Act and seeking compensation for 18 years of what it says are excessive fees for merchants.

The lawsuit comes three years after Disney opted out of a $6 billion multidistrict litigation settlement with Visa and Mastercard that alleged the card issuers conspired to fix the fees that stores pay to accept credit cards.

In this most recent lawsuit, Disney, which accepts Visa and Mastercard branded debit and credit cards, claims it has been forced to pay high default “interchange fees” levied by Visa and Mastercard.

Banks and other financial institutions make money off debit and credit cards through interchange fees imposed on merchant retailers like Disney for the “privilege of accepting the issuing bank’s card,” the lawsuit states. 

But Visa and Mastercard’s positions in the market have allowed them to set the default prices of these fees overly high, Disney alleges.

“As a consequence, the setting of ‘default’ interchange fees effectively fixes the price of acceptance at a supracompetitive level,” Disney claims in the lawsuit. 

“Plaintiff has paid significantly higher costs to accept Visa-branded and Mastercard-branded credit and debit cards than they would if the banks issuing such cards competed for merchant acceptance, injuring both Plaintiff and consumers (including cardholders) through higher costs and decreased consumer welfare.”

Disney says more competition needed between card-issuers

Disney said it has paid substantial amounts in credit and debit interchange fees to issuing banks that are members of Visa and MasterCard since 2004. 

It said that eliminating competitive restraints between the companies—restoring competitive markets for merchant acceptance of credit cards and debit cards—would substantially reduce interchange fees.

This would allow it and other merchants to “operate more efficiently and at lower costs, to its benefit and the benefit of its customers, including cardholders.” 

Disney is seeking damages, fees, costs and a jury trial. 

Meanwhile, several banks and financial institutions have agreed to a $188 million CAD class action settlement resolving claims they charged high interchange fees and put in place rules that restricted merchants’ ability to surcharge or refuse higher-cost Visa and Mastercard credit cards.

In June, Costco closed out a 17-year-old multidistrict litigation by reaching a deal with Visa, Mastercard, and several banks who were accused by the wholesale retailer of conspiring to charge merchants anti-competitively high transaction fees when consumers used their credit cards. 

What do you think of the allegations in this case? Let us know your thoughts in the comments! 

Disney is represented by Sanford M. Litvack of Chaffetz Lindsey LLP.

The Disney Visa Mastercard Class Action Lawsuit is The Walt Disney Co. v. Visa Inc. et al., Case No. 1:22-cv-04489, in the U.S. District Court for the Eastern District of New York. 

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