Virginia-based group the Retail Industry Leaders Association has decided to pass on a settlement deal in a major national case against MasterCard and Visa.
The class action was originally filed in 2005 against the card companies alleging that they violated federal antitrust law in setting “swipe fees” charged to retailers when consumers pay for a purchase with a credit or debit card.
The suit reached a proposed settlement last year.
Under the terms of the deal, merchants would be allowed to pass on swipe fees to consumers (previously, they were forced to pay the charge, which typically costs 1 to 3 percent of the cost of a purchase).
Specifically, notice of the additional surcharge would need to be posted and included on a purchaser’s billing statement and credit card receipt. In addition, the fees could not be passed on selectively – for purchases under $20, for example – but must be applied to all transactions.
An estimated class of 8 million merchants would also be entitled to payments from a $6 billion fund and would avoid swipe fees for an eight-month period (valued at an additional $1.2 billion).
Several plaintiffs – including RILA and other trade groups like the National Restaurant Association and the National Grocers Association, as well as companies like Affiliated Foods Midwest and D’Agostino Supermarkets – objected to the settlement.
They argued that it failed to address systemic problems in the marketplace and allowed MasterCard and Visa to continue to set swipe fees.
U.S. District Court Judge John Gleeson for the Eastern District of New York granted preliminary approval of the settlement over the objections.
Now, class members are faced with a choice: take no action and be deemed by the court to approve of the deal, object to the settlement as a whole or opt out of the financial component.
RILA announced today that it will opt out of the settlement, rejecting the financial reward.
“RILA and the overwhelming majority of our members agree that the proposed class action settlement is a bad deal for retailers,” Deborah White, executive vice president and general counsel of the group, said in a press release. “The proposed settlement undermines merchants’ legal rights forever and fails to restrain the continued growth of swipe fees increases.”
The deal continues a “duopoly” by Visa and MasterCard and still allows the companies to set interchange rates, the group protested. RILA also expressed concern that the deal “could limit emerging innovations that can bring meaningful competition to the marketplace, such as mobile payments” because of limitations on future legal action.
A hearing on final approval for the controversial settlement is set for September.
Source: http://valawyersweekly.com/vlwblog/2013/04/11/retail-group-wont-buy-into-settlement-deal/
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