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Making Sense of the $6+ Billion Visa / Mastercard Class Action Settlement & How it Affects You

Have you ever felt burdened by the high interchange fees demanded by payment card associations such as Visa and Mastercard? You certainly aren't alone.

$5.54 Billion Visa Mastercard Cash Settlement Universal - Case Background Info and How it Affects Small Business Owners Processing Blog

Case Background and History

Merchant have long argued that card associations set interchange fees and rules governing payment card acceptance in ways that amounted to illegal price fixing. In 2005, a number of merchants concerned with these unfair practices came together in a major class action lawsuit. In the lawsuit officially known as Payment Card Interchange Fee and Merchant Discount Antitrust Litigation (MDL No. 1720), 19 named plaintiffs, representing the class of all merchants sued Visa, MasterCard, and a number of card-issuing banks, including Bank of America, Citi Group, and many others. After years of litigation, the two sides reached an agreement in 2012, however this was vacated by the courts as the withdrawal of many of the major merchants left the case with insufficient merchant representation.

A Payout Finally on the Horizon

On December 13, 2019, the court finally reached a new settlement - one that is expected to be final. Ultimately, the newly proposed settlement represents a larger effective payout for smaller merchants remaining in the class action suit, cementing the case as the largest anti-trust settlement in U.S. history. More importantly, it allows major merchants to opt-out without negating the deal. In fact, many of the same major merchants, such as Amazon, Target, and Starbucks have already opted-out of the latest settlement. It is important to note, however, that these major merchants likely would not have been easily persuaded to take a deal regardless of the settlement as they have clout and influence to negotiate better deals and likely place a far greater value on maintaining their right to pursue legal action against the payment card associations. Walmart for instance, who generated 350 billion dollars in card fees between 2005 and 2014, pursued their own $5 billion dollar lawsuit against Visa and Mastercard shortly after they opted out of the initial 2013 settlement.

How it affects you

Ultimately, for smaller retailers this could mean a significant cash settlement is on the horizon. If your business accepted credit card payments between January 1, 2004, and January 24, 2019, you are included in the scope of the class action lawsuit and are eligible to receive a portion of the settlement. On December 13, 2019, cleared the remaining administrative issues associated with the case by declaring the proposed settlement "Fair and Adequate." This means that the court is free to declare a claim form, set an enrollment deadline, and ultimately, progress into into the "Payment Phase." While the case is still being appealed, many experts believe that the current terms will be affirmed. Even so, the complicated claims process means that the settlement may still take years to pay out. That said, eligible merchants should not stand idle. It will be important to monitor the case and ensure that deadline for enrollment are met. You've already overpaid in interchange fees - you won't want to miss out on your opportunity to recover the cash relief that you are entitled to.


How to take action

To offer our merchant partners a way of simplifying the claims process, we've partnered with Brownstone Recovery. Brownstone Recovery is a third party recovery service that will help you manage your claim. The only action required on your part is enrollment. From there, Brownstone Recovery will handle the details of the case while keeping you apprised of any important developments. We've negotiated a favorable rate for our clients who would like to employ this service - you can find more info and a sign up link below. Alternatively, you can elect to file your own claim. For this, be sure to read our attached FAQ for more details on the case and familiarize yourself with important steps for enrollment as well as relevant deadlines.

Read our FAQ

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