Court Approves Record-Breaking Swipe Fee Settlement
NEW YORK — A class action lawsuit between merchants and financial institutions, namely Visa Inc. and Mastercard Inc., is moving closer to a final settlement.
On Feb. 22, the U.S. District Court for the Eastern District of New York in Brooklyn announced it has given preliminary approval to a multibillion settlement in a suit alleging Visa, Mastercard and other banks violated antitrust laws and caused merchants to pay excessive fees for accepting Visa and Mastercard credit and debit cards.
Visa and Mastercard, along with other defendants, have said they did violate the laws and the court has not decided which party is right. Both parties agreed to a settlement, according to the court.
Under the settlement, Visa, Mastercard and the other bank defendants have agreed to provide approximately $6.24 billion in class settlement funds. Those funds are subject to a deduction to account for certain merchants that exclude themselves, but in no event will the deduction be greater than $700 million, the court statement explained.
After attorneys' fees and costs, the settlement will be used to pay valid claims of merchants that accepted Visa or Mastercard credit or debit cards at any time between Jan. 1, 2004 and Jan. 25, 2019.
If the Court grants approval of the settlement, and if that approval is affirmed on any appeals, every merchant that does not exclude itself from the class by the deadline described below and files a valid claim will get money from the class settlement fund. The value of each claim will be based on the actual or estimated interchange fees attributable to the merchant's Mastercard and Visa payment card transactions from Jan. 1, 2004 to Jan. 25, 2019.
Merchants who are included in this lawsuit can:
- Exclude themselves from the settlement class by July 23. They can individually sue the defendants on their own at their own expense.
- Object to the settlement by July 23.
- File a claim to ask for payment if the court grants final approval, and if that approval is affirmed on any appeals.
The proposed settlement was reached in September; however, some in the retail community said the settlement did not go far enough.
As Convenience Store News previously reported, groups including NACS, the Association for Convenience & Fuel Retailing, the Retail Industry Leaders Association, the Retail Litigation Center and the National Retail Federation said the agreement did not address efforts to change network rules.
The U.S. District Court for the Eastern District of New York will hold a hearing for final approval of the proposed settlement on Nov. 7.