Retailers Applaud Supreme Court's Swipe Fee Decision

WASHINGTON, D.C. — The Retail Industry Leaders Association (RILA) and the National Retail Federation (NRF) are cheering a U.S. Supreme Court move to let stand a lower court's decision to toss a 2012 settlement relating to credit card swipe fees.

RILA applauded a decision by the Supreme Court that turned away an attempt by the country's largest financial institutions and credit card companies to reinstate a $7.25-billion class action settlement that had been overturned by the 2nd U.S. Circuit Court of Appeals. 

RILA and NRF filed a brief earlier this year opposing the effort to reinstate the settlement terms of a lawsuit challenging the anticompetitive behavior of the major financial services industry players in setting credit card fees.

"The [settlement] crafted by the banks and the credit cards was badly flawed, and the Second Circuit recognized as much in its decision. We are pleased that the Supreme Court decided to leave the lower court's ruling in place," said Deborah White, RILA senior executive vice president and general counsel.

"Merchants and consumers continue to suffer from the anti-competitive practices of banks and card networks. We now have a fresh opportunity to curb these unfair practices," she added.

According to RILA, in their request for an appeal of the lower court's decision, the proponents of the settlement claimed to speak for the merchant community. In the brief filed earlier this year, RILA and other merchant trade associations explained that the merchant community broadly opposes the settlement and is, in fact, "united in the view that this deal is a bad one, unworthy of resuscitation."

NRF also welcomed the move by the highest court.

"If this settlement had been approved, the structure of fees that drive up the prices of everything consumers buy would have been cemented into place forever," NRF Senior Vice President and General Counsel Mallory Duncan said. "Now something can finally be done to bring these fees under control."

She added retailers were skeptical of the deal from the beginning. "It would have done nothing to keep swipe fees from rising in the future. It was nobody’s idea of a good settlement."

According to NRF, the  justices' decision leaves the 2005 lawsuit pending in U.S. District Court in New York, where retailers could go to trial, pursue a revised settlement or focus on other lawsuits over the issue that have been filed more recently.


In late June, the 2nd U.S. Circuit Court of Appeals in New York threw out the antitrust settlement among Visa, MasterCard and millions of retailers over credit card fees. In the move, the federal appeals court said some of the retailers were inadequately represented in the litigation, as CSNews Online previously reported.

It also decertified the case as a class action.

The court's decision overturned a July 2012 agreement that settled claims that the credit card companies overcharged merchants on swipe fees — also known as interchange fees. U.S. District Judge John Gleeson in Brooklyn, who has since left the bench, had approved the settlement in 2013.

The settlement had been the largest all-cash antitrust accord in U.S. history. One class of merchants that accepted Visa or MasterCard from January 2004 to November 2012 was to share up to $7.25 billion, while a second class accepting the cards from then on was to get injunctive relief in the form of rule changes.

But many retailers objected, saying the settlement, among other things, forced members of the second class to give up their right to sue over various policies and practices.

Arlington, Va.-based RILA is a trade association whose members include more than 200 retailers, product manufacturers, and service suppliers.

Washington, D.C.-based NRF represents discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries.  

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