Supreme Court Refuses to Reinstate Settlement of Swipe Fee Suit

March 28, 2017  by Larry Thomas in Industry, Legal   

The $7.25 billion settlement had been opposed by many major retailers, as well as the National Retail Federation, which argued the settlement would have done nothing to prevent the fees from rising in the future because it merely allowed retailers to assess a surcharge for credit and debit card purchases.

In a statement praising the high court decision, NRF said many smaller retailers would have received only a few hundred dollars and would have given up their right to sue in the future.

“Retailers were skeptical of this settlement from the beginning,” said Mallory Duncan, senior vice president and general counsel at NRF. "It was nobody’s idea of a good settlement.”

The case dates back to 2005, when a group of retailers and trade associations filed suit against Visa and MasterCard, accusing them of price fixing because member banks were not allowed to establish their own swipe fees, which are collected each time a consumer uses a debit or credit card to make a purchase.

A U.S. District Court judge approved the settlement in 2012 over the objections of NRF and other retailers, but the 2nd U.S. Circuit Court of Appeals threw out the settlement last year, finding that retailers "were inadequately represented" in the original agreement.

NRF said the settlement "failed to reform the cartel-like system where Visa and MasterCard set a rigid schedule of credit card swipe fees" for all banks that issue their cards.

According to NRF, this week's Supreme Court decision leaves the 2005 suit pending. Retailers could go to trial, try to work out a new settlement, or focus on other lawsuits on the issue that have been filed more recently, the group said.