Despite unprecedented opposition from merchants, on Friday a federal judge gave preliminary approval of a $7.2 billion settlement of litigation against Visa, MasterCard and several large banks. Class counsel representing the named plaintiffs reached the settlement with defendants in July. However, 10 out of 19 of the original named plaintiffs (including NATSO) oppose the settlement and are no longer represented by class counsel.
The settlement does nothing to fix the broken system, which was the plaintiffs' original reason for filing the suit. The only winners under the settlement agreement are the lawyers and credit card companies. If the agreement achieves final approval, Visa and MasterCard will be legally protected against future lawsuits for anti-competitive behavior. Even though Visa and MasterCard will pay out billions of dollars, there is nothing that prevents them from hiking swipe fees in the future to recoup those damages, as well as the significant fees paid to class counsel if the settlement agreement achieves final approval.
In addition to the 10 class plaintiffs, 1,200 other merchants (including Wal-Mart), associations and American Express objected to the settlement.
In granting preliminary approval, the judge said objections from some plaintiffs were “overstated” and insufficient to deny the settlement at this stage. However, he said that the legal standard for preliminary approval is low, and he cautioned “I don't mean to suggest that there aren't a number of issues that would require more scrutiny,” when the settlement comes up for final approval next year.
When the judge asked class counsel about the value of the rule changes (including surcharging) in the settlement he said, “Perhaps off the cuff it's something like $10 billion.” Class counsel argued that surcharging will assert downward pressure leading to lower cost. Even though surcharging is prohibited in 10 states, he asserted that national merchants can use it to lower overall interchange rates.
Photo Credit: exile7/bigstock.com
This article originally ran in NATSO News Weekly (NNW), NATSO's member only weekly electronic newsletter. NNW is packed with the latest updates on government and business issues affecting the truckstop and travel plaza industry.
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