The Saga of Swipe Fee Lawsuits

Merchants, deeming it a mere slap on the wrist, seek to overturn $5.7 billion settlement against Visa, MasterCard, and Amex.

June 23, 2015

NEW YORK – Over the weekend, Barron’s published an article in which the author, Jim McTague, described the long-running battle between retailers and card companies as almost Dickensian, comparing it to the mid-nineteenth century novel Bleak House and its decades-long lawsuit of Jarndyce and Jarndyce.

For those who may not have been following every twist and turn over the past decade, McTague gives a quick synopsis of events from the original merchants’ 2005 suit alleging anticompetitive behavior by the card firms. Then in 2010, the Justice Department filed its own suit against the three big card issuers, claiming that their merchant rules broke antitrust laws. Visa and MasterCard settled with the Justice Department and changed their rules. AmEx fought on, losing in February, but is expected to appeal.

Now, merchant groups, including NACS, are trying to overturn provisions of a 2013 court-ordered $5.7 billion settlement against Visa and MasterCard for inflating swipe fees, arguing that the settlement limits future fee-related lawsuits and does little to prevent the card companies from colluding to set higher fees. Furthermore, the $5.7 billion settlement is little more than a slap on the wrist for the card companies, which get more than $50 billion in swipe fees each year.

But that’s just the beginning of what has possibly become an example of truth being stranger than fiction: Some are suggesting that there’s now a possibility of the settlements being overturned, with the discovery of improper conduct between lawyers representing the merchants and card companies in two separate cases.

Since learning about the legal malfeasance, merchant group have protested the “tainted” the settlement talks and the federal judge in the AmEx case is deciding which of the 1,000-plus e-mails should be turned over to the merchants.

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