22 October 2017
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Retailers urge Supreme Court to strike out interchange fee settlement

22 February 2017  |  2073 views  |  0 Source: National Retail Federation

The National Retail Federation and the Retail Industry Leaders Association today asked the U.S. Supreme Court to let stand an appeals court ruling that struck down a controversial 2012 settlement of a class action lawsuit over Visa and MasterCard’s credit card swipe fees.

“This alleged ‘settlement’ was a backroom deal that would have done nothing to end price fixing or keep swipe fees from soaring in the future,” NRF Senior Vice President and General Counsel Mallory Duncan said. “Even worse, it includes a provision that would keep merchants from ever suing over this issue again. The Circuit Court did the right thing in tossing this case out and it should not be revived. There are ways to bring swipe fees under control but this settlement is not one of them.”

“This is not just a business-to-business dispute,” Duncan said. “These fees drive up the price of retail merchandise, costing the average family hundreds of dollars a year in added expenses.”

The 2nd U.S. Circuit Court of Appeals last year struck down a $7.25 billion antitrust settlement approved by U.S. District Court Judge John Gleeson in a 2005 lawsuit brought by a small group of retailers and trade associations claiming to represent the retail industry.

Gleeson approved the settlement even though NRF and others argued that it failed to reform the price-fixing system under which Visa and MasterCard set fees for credit cards issued by thousands of banks. Rather than lower the fees, the card companies proposed in the settlement that they be passed along to consumers as a surcharge. Major retailers rejected the surcharge proposal, saying it was the opposite of what they sought, while small retailers would have seen as little as a few hundred dollars each. Retailers who rejected the monetary settlement would have still been bound by other restrictions the court would not let them opt out of, including a prohibition on future lawsuits over the fees.

NRF in 2014 asked the 2nd Circuit to overturn the settlement, saying a broad cross section of the retail industry ranging from independent Main Street stores to national chains opposed the deal. The appeals court ruled in NRF’s favor last year, saying that merchants “were inadequately represented” in the case. That ruling, however, has been appealed to the Supreme Court by some of the original plaintiffs.

“The settlement itself achieved nothing important for merchants that accept credit cards, which is why every prominent group that represents merchants has opposed it,” NRF and RILA said in a joint brief filed today with the Supreme Court. “This deal is a bad one, unworthy of resuscitation.”

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