ALEXANDRIA, Va. – NACS President and CEO Henry Armour delivered testimony yesterday before U.S. District Judge John Gleeson in Brooklyn, New York at the fairness hearing to consider granting approval to a proposed settlement of a long-standing antitrust class action filed by merchants against Visa, MasterCard and the largest banks.
The hearing is the latest contentious step in moving forward the proposed settlement of longstanding antitrust litigation between merchants and the credit card industry proposed settlement of the case, which is known as “In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation.” NACS expressed its opposition to the terms of the proposed settlement on the day that it was announced in July 2012. Following are Armour’s remarks:
“NACS and the majority of the named plaintiffs have filed objections to the settlement. NACS has opted out of the monetary portion of it. We have also filed a response to correct inaccuracies in a recent declaration from class counsel.
From the beginning of this litigation, our principal concern has been to obtain meaningful reforms of the credit card market to restrain the undue market power being used to set fees.
Anti-competitive practices have resulted in our industry paying more in card fees than it makes in pre-tax profits every year since 2006. The vast majority of our industry is made up of small businesses. In fact, 60% are single store operators. Because our industry pays such huge fees, $11.2 billion in 2012, NACS has had thousands of conversations with our members about interchange fees and discussed the problems and potential solutions in depth.
This settlement, unfortunately, ignores the views of NACS, the majority of named plaintiffs and other merchants including NACS’ 30-member board of directors made up of small and large retailers from around the country. We raised our concerns early and often, and we have now been joined by merchants far and wide. The primary rules relief in the settlement, surcharging, is completely unworkable because of negative consumer reactions to surcharging, state laws that prohibit it, and the level-the-playing field provisions. Most telling is the fact that since February when retailers have had the ability to surcharge under the settlement there has been virtually no movement in that direction. That is compelling evidence that the ability to surcharge has no value to the class.
Further this settlement has the potential to make things much worse by giving the Defendants an incredibly broad release of claims for future bad conduct.
This settlement is worse than losing at trial.
Losing would not bar the courthouse door to merchant challenges to future unfair card industry practices including current bad practices being applied to new technologies like mobile payments. The settlement provides nothing of any real value beyond the money. And the scope of the release will allow the Defendants to raise rates and recoup the money before it is even distributed to merchants, which is precisely what happened in the Visa check case.
We strongly urge the Court to reject this settlement.”