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£14 billion lawsuit against MasterCard edges closer to UK courts

09 September 2016  |  9628 views  |  3 card chip

Lawyers handling a £14 billion class action lawsuit against MasterCard have handed in a 600-page sheaf of documents to the Competition Appeals Tribunal (CAT) in the UK in support of allegations that the card scheme imposed "illegal" interchange fees that were ultimately borne by UK consumers.

The claim, brought under the Consumer Rights Act of 2015 which paved the way for class action lawsuits, is being led by former financial ombudsman Walter Merricks.

The appeal to CAT comes after MasterCard lost a 10-year legal battle with the European Commission over the level of interchange fees levied on debit and credit card charges.

The legal firm handling the case, Quinn Emanuel, has raised £40 million to take the case to court.

The documents handed in to CAT inlude a report from independent expert economists and accountants that support the claim; and a detailed plan for managing the claim, including how the proposed class of 46 million consumers will be communicated with through a claims website, newspapers, magazines and social media.

High profile consumer groups such as Which? and MoneySavingExpert.com have also agreed to follow the progress of the proposed claim and keep consumers updated.

Merricks states: “MasterCard charged billion of pounds of unlawfully high fees for its sole benefit and to the detriment of consumers. It has already been found to have broken competition law, the basis of which was to protect consumers, and that cannot be disputed. There is no basis upon which MasterCard can contend that its card fees were not unlawful. I am confident that the CAT will authorise the claim to go forward, and I look forward to the opportunity to present our case. This is a watershed moment for consumer redress in this country.”

MasterCard is certainly taking the challenge seriously, ditching its usual team of legal advisors in favour of one of the most highly regarded ‘Magic Circle’ defence law firms, Freshfields Bruckhaus Deringer, to represent its case.

In a statement, MasterCard says: "Now that the claim has been filed, we will take time to review it in detail. However we continue to firmly disagree with the basis of this claim and we intend to oppose it vigorously."

Comments: (3)

A Finextra member
A Finextra member 09 September, 2016, 14:02

I am not surprised by these types of lawsuits. They are a natural extension of the high costs of delivering retail payments services. When I started this business 45 years ago the CEO of then a small paynments company (which is now a world leader) said interchange would eventually go away once the cardholder banks had a critical mass of cards. Fast forward to today -- unregulated interchange funds rewards programs and other goodies.

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A Finextra member
A Finextra member 12 September, 2016, 07:50 I'm sure Dee Hock knew that the gravy train would end one day. In my opinion it has gone on far too long. Looks at the world leader now... Spends $20bn on Fifa and Olympics and what do the card holders get for it?? Maybe a few free tickets. How many execs have been wined and dined at the expense of the card holder? Visa alone has spent $40bn in the last six years selling and then buying itself back from member banks and all of this is funded how?? It's shame that a very clever but simple business Is now viewed in such a distasteful manner.
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A Finextra member
A Finextra member 28 July, 2017, 15:47

A good example of Corporate greed by the main card schemes. Don't forget that Visa Europe, before it was bought back by Visa Inc. always claimed that they were a "not for profit organisation". Err, yeah. right!

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