Hearing Next Week for Final Approval of $7.25B Visa/MC Settlement
BROOKLYN, N.Y. — The $7.25 billion settlement reached in July 2012 to end a class-action lawsuit over credit card transaction fees has crossed over an important hurdle for payouts.
Visa Inc. and MasterCard Inc. will continue to pursue the settlement over swipe fees despite opposition to the deal reached a level that would have allowed the card companies to walk away.
Twenty-five percent was the threshold that permitted the credit card companies to back out of the deal, which has been described as the largest-ever U.S. antitrust accord. Defendants in the case also include card-issuing banks such as JPMorgan Chase, Bank of America, Citibank, Wells Fargo and Capital One.
Scores of major retailers — including 7-Eleven Inc., Alon Brands Inc., Wal-Mart Stores Inc. and Starbucks Corp. — had objected to the deal and claimed merchants should receive more money. Trade groups, such as those for convenience and fuel retailers and the National Retail Federation, also advocated against the settlement.
"The defendants as a group had the right to terminate the settlement agreement because the volume threshold of 25 percent was exceeded, but elected not to do so," MasterCard President and CEO Ajay Banga told investors recently.
Currently, the case is before U.S. District Judge John Gleeson presiding in Brooklyn. A fairness hearing for final approval of the proposed settlement is slated for Thursday.
Small businesses stand to benefit, including online adult websites, which are prime plaintiffs given the volume of credit card purchases.
The nuts and bolts of the class-action suit revolves around the presumption that Visa and MasterCard, along with their member banks, conspired to fix and artificially inflate the interchange fees that merchants pay to accept Visa and MasterCard branded debit and credit cards.
Patrick Jermyn, an attorney with Harrison, N.Y.-based Class Action Refund LLC, who in recent years has been alerting the online adult sector about the litigation, says that any company that accepted Visa and MasterCard credit and or debit cards beginning in 2004 will be eligible to participate in the settlement.
That relevant time starts in 2004 and could go as far as 2011, said Jermyn, whose firm is one of many class action recovery firms working on the suit.
The case is In re Payment Card Interchange Fee and Merchant Discount Litigation, 05-MD-1720.