Home Depot Sues Visa, MasterCard over EMV Switch

Home Depot Inc. has filed an antitrust lawsuit against Visa and MasterCard, adding to claims from a previous lawsuit alleging that retailers pay too much in swipe fees by now questioning chip-based cards' effectiveness in reducing fraud without PIN authentication. 

Home Depot, along with hundreds of other retailers, opted out of an anti-trust settlement settlement in a previous antitrust case addressing many of the same issues.
 
In its new suit, Home Depot claims that Visa and MasterCard illegally colluded to prevent the adoption of new chip-based cards that require consumers to enter a PIN to authorize a transaction.  "Visa and MasterCard know perfectly well that a signature alone, without the additional step of requiring a PIN, provides virtually no protection against many types of payment card fraud," Home Depot said in the lawsuit.
 
Dozens of NATSO members from throughout the country met with lawmakers in Washington, D.C., in May to discuss some of these very same issues at NATSO's annual Day on the Hill.  Specifically, NATSO members discussed how the transition to chip-based cards was in fact simply a method by which card companies can pass liability on to retailers without actually improving data security.  Many merchants, especially smaller operators, have spend thousands of dollars on new chip-reading point of sale equipment, but have not been able to get that equipment "certified" by the card companies.  Until the equipment is certified, the merchants are completely exposed to chargebacks for alleged instances of fraud, and have no way of limiting this exposure.
 
"While chip-and-PIN authentication is proven to be more secure, it is less profitable for Visa, MasterCard, and their member banks and it provides a greater threat to their market dominance," Home Depot's lawsuit claims. 
 
The card companies are likely to seek to transfer the case from the Georgia court in which it was filed to a federal court in Brooklyn that is handling other "opt-out" cases filed by merchants including Target and 7-Eleven.  
 
Home Depots suit comes on the heals of Wal-Mart suing Visa for the right to choose how customers authorize debit-card purchases.  The retailer wants to use a PIN, but Visa requires that shoppers have the choice between a PIN and a signature. 
David Fialkov's photo

David Fialkov

David Fialkov is the Vice President of Government Relations, as well as the Legislative and Regulatory Counsel, at NATSO. In this capacity, Mr. Fialkov direct's NATSO's legislative, regulatory, and legal strategy on a range of issues, including transportation, energy and fuels, labor, data security, and taxes. Mr. Fialkov also oversees NATSO's political engagement program, including individualized legal and political counsel to member companies. Prior to joining NATSO, Mr. Fialkov was the senior associate in the Government Affairs and Public Policy practice at the law firm of Steptoe and Johnson in Washington, D.C. At Steptoe, Mr. Fialkov advised clients on legislative, regulatory, and political issues, as well as legal concerns. His primary clients included trade associations representing the motor fuel wholesale and retail industries, including the National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America. Mr. Fialkov's focus was not only on the motor fuels business, but also the litany of other issues that retailers confront, including labor matters, foodservice issues, healthcare and employment issues, tax matters and data security. Prior to joining Steptoe, Mr. Fialkov graduated with honors from George Washington University Law School. He received his B.S. Summa cum laude with highest honors from Clark University in Worcester, MA. He lives in Washington, D.C. with his wife Allison and daughter Lilah. More
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