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June 18, 2014

US retailers requests court to overturn credit card swipe fee settlement

The National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) have asked an US appeals court to overturn a federal judge’s approval of a controversial lawsuit settlement over Visa and MasterCard’s credit card swipe fees.

By Verdict Staff

The National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) have asked an US appeals court to overturn a federal judge’s approval of a controversial lawsuit settlement over Visa and MasterCard’s credit card swipe fees.

In their petition, they argued that the settlement was negotiated by only a handful of merchants and would do nothing to bring the fees under control.

NRF senior vice president and general counsel Mallory Duncan, said: "The truth is that there is no settlement with the retail industry, only an agreement with a handful of merchants who do not represent the industry as a whole."

"Given that the judge knew this backroom deal was opposed by a broad range of small and large retailers alike and allows these fees to continue to skyrocket, it clearly should never have been approved. This is a serious mistake the appellate court needs to correct."

RILA executive vice president and general counsel Deborah White, said: "The retail community remains fully committed to fighting this flawed settlement and addressing the fundamental lack of competition in the electronic payments market."

"Quite simply, the proposed settlement not only undermines merchants’ legal rights and fails to restrain Visa and MasterCard’s ability to increase swipe fees with impunity, but it also has broad implications on the rights of others in future meritorious class action cases."

The district court approved the antitrust settlement even though NRF, RILA and other opponents argued for more than a year that it failed to reform the price-fixing system under which Visa and MasterCard set fees for credit cards issued by thousand of banks.

Rather than lower the fees, the card companies proposed in the settlement that they be passed along to consumers as a surcharge.

Major retailers rejected the surcharge proposal, saying it was the opposite of what they had sought.

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