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Potential Merchant Credit/Debit Card Claims

September 1, 2014

In a recently decided case, The United States District Court for the Eastern District of New York preliminarily approved a settlement in excess of $6 billion dollars involving contentions merchants, such as AASP members, paid excessive fees to accept Visa and MasterCard credit and debit cards.  The defendants included not only Visa and MasterCard but also many of their affiliated banks.  The theory of the case is that the credit card companies, individually, and together with banks, violated anti-trust laws by setting what is called "interchange fees".  An interchange fee is a fee imposed when a card holder makes a purchase with a credit card, usually 1% or 2% of the purchase price, paid to a bank.  Interchange fees account for the greater part of fees paid by merchants for accepting Visa and MasterCard credit and debit cards.

Contended was Visa, MasterCard and their affiliated banks violated anti-trust laws because they impose and enforce rules limiting merchants from steering customers to other payment methods, thereby lessening competitive pressure to lower interchange fees.

The settlement consist of 2 funds: a cash fund in the amount of about $6 billion dollars to pay claims of any business, person or other entity that accepted Visa or MasterCard branded credit or debit cards in the United States for a period between January 1, 2004 to November 28, 2012.  The second portion of the settlement fund is estimated to approximate $1.2 billion dollars relating to a portion of interchange fees attributable to merchants who do not exclude themselves from the first portion of the settlement.  Visa, MasterCard and the banks will contribute to the settlement fund.

In part, the settlement also requires Visa and MasterCard to allow merchants to charge customers an extra fee if they pay with cards; offer discounts to customers who pay with payment forms less expensive than Visa or MasterCard credit and/or debit cards; and allows merchants to form buying groups that meet certain criteria to negotiate with Visa and MasterCard for better fee arrangements.

The case involved extensive litigation over 7 years.  Merchants who had accepted Visa or MasterCard credit or debit cards during that period of time should have received a Class Action Notice of Settlement.

The above is basic information concerning the case which, obviously, over such a lengthy period of time, became extraordinarily complicated with respect to a settlement.  The Court still must approve the settlement which is likely.

This article is simplistic explanation of case and settlement.  Suggested is AASP members who have paid significant card fees contact their attorney to determine whether filing a claim is worth the time and effort to calculate the amount that might be recovered.

This article was written by Norman P. Zarwin, Esquire and published in the Alliance of Automotive Service Providers of Pennsylvania and Delaware magazine. 

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