Legal News

Credit Card Companies and Banks Pacify Disgruntled Retailers with $7.25 Billion Settlement
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

According to court papers for settlement filed on Friday in Brooklyn federal court, Visa, MasterCard, and the banks issuing credit cards of these companies have agreed to a settlement at $7.25 billion with retailers disgruntled with their policies. The settlement would also allow retail stores to encourage customers to use alternative and cheaper forms of payment than by credit cards.

The settlement is aimed to resolve dozens of lawsuits that have been filed by retailers since 2005, alleging that the credit card companies have been fixing fees for processing credit and debit card payments and have been steering stores to compel their customers pay by credit cards. If a judge approves the settlement, it would be the largest antitrust settlement in the history of U.S.A.

The settlement involves a payment of $6 billion by credit card companies and the country’s largest banks to a class of retailers. The card companies have also agreed to reduce the swipe fees for the next eight months following the settlement leading to the savings of another $1.2 billion. Stores that had sued individually would receive an additional $525 million.

  
What
Where


Bonny Sweeney, a lawyer for the plaintiffs, said, “This is an historic settlement … In addition to refunding billions of dollars to retailers that paid artificially inflated interchange fees, the reforms will create real price competition, leading to reduced card-acceptance fees for retailers.”

However, both Joseph Saunders, the CEO of Visa, and Noah Hanft, general counsel for MasterCard, were of the opinion that the settlement is being entered into because it is in the best interests of all to reach an amicable resolution. They were not clear as to why since 2005, they had not thought of such amicable resolution, but had been disputing the claims of the retailers in courts.

The plaintiffs had maintained that both Visa and MasterCard had colluded directly and indirectly through the issuing banks to prevent merchants from getting out of their grips. Major plaintiffs in the case include pharmacy chain Rite-Aid Corp, supermarket chain Kroger Co and shoe retailer Payless ShoeSource. Other plaintiffs include trade associations like the National Grocers Association, the American Booksellers Association, and the National Association of Convenience Stores.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!




Besides Visa and MasterCard, dozens of major banks including JP Morgan & Chase & Co were also named as defendants for passing on the costs to the merchants.

In 2003, Visa and MasterCard had to make a combined $3 billion settlement with retail stores for their “honor all cards” policies, which tied acceptance of credit to debit cards. Though both Visa and MasterCard had been fighting it out with small retailers in the courts, things took a radical turn in 2010 when the U.S. Department of Justice brought a civil antitrust suit against the companies. The companies settled the suit and as part of the consent decree agreed to drop many policies, which retail stores had been protesting against since 2005 in individual and collective lawsuits.



The case is In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, in the U.S. District Court for the Eastern District of New York, no. 05-1720.



 

RELEVANT JOBS

Litigation Attorney

USA-FL-Mount Dora

Stone & Gerken, P.A., a boutique firm since 1992, is seeking an attorney with 5 to 8 years of litiga...

Apply now

Staff Attorney

USA-WI-Milwaukee

We are an established bankruptcy firm seeking a full-time Staff Attorney in our Milwaukee location f...

Apply now

Senior Associate Attorney

USA-CA-Murrieta

SENIOR ASSOCIATE ATTORNEY/POTENTIAL EQUITY SHAREHOLDER Our firm is pleased to announce we are seeki...

Apply now

Associate Attorney

USA-OH-New Albany

Established law firm in New Albany, Ohio exclusive to the area of Elder Law is seeking an Associate ...

Apply now

BCG FEATURED JOB

Locations:

Keyword:



Search Now

SEC Attorney

USA-MA-Waltham

Waltham office of our client seeks SEC attorney with 3-5 years of experience to assist with all aspe...

Apply Now

Commercial Litigation Attorney

USA-CA-Los Angeles

Los Angeles office of a BCG Attorney Search Top Ranked Law Firm seeks commercial litigation attorney...

Apply Now

Mid to Senior-level Real Estate Associate Attorney

USA-FL-Miami

Miami office of a BCG Attorney Search Top Ranked Law Firm seeks mid to senior-level real estate asso...

Apply Now

Most Popular

SEARCH IN ARCHIVE

To Top