Believing they will fare better independently, some large US retailers have withdrawn from a proposed $7.2 billion credit card fee settlement class-action over a reported conspiracy to inflate credit card fees.
In 2012, a class of merchants reached a settlement deal with Visa and MasterCard, which
Merchant who opt out of credit card fee settlement at risk
some members of the class and their attorneys said was excessively small. They also criticized the deal for including broad litigation releases that could protect Visa and MasterCard from future lawsuits involving antitrust violations.
Merchants that were unhappy with the settlement were given a May 28 deadline to opt out. Target, CVS Pharmacy, and Shop Rite did so, and filed their own lawsuits against Visa and MasterCard; other merchants are likely to follow. Retailers that opt out of the agreement give up their rights to claim any part of the $7.2 billion settlement as they attempt to recover more damages, and are at risk of ending up with nothing.
US District Judge John Gleeson, who is overseeing the class-action suit, has not yet ruled on some of the suit’s key motions, including those for summary judgement, that could potentially impact merchants that opt out, say backers of the settlement. Visa and MasterCard have asked Gleeson to declare interchange fees lawful and pro-competitive, in which case the opt-out plaintiffs would be prevented from seeking separate damage actions.
Merchants opting out of a $7.25 billion legal settlement between Visa, MasterCard, and retailers will probably not have a noticeable impact on the deal, according to Visa CEO Charles Scharf.
He says although the dissenting parties constitute about 25% of Visa and MasterCard’s credit card sales volume, “we don’t think it changes the outcome of our position, or the court’s.”
The deal grants Visa and MasterCard the right to terminate the settlement if the 25% opt-out threshold is reached. The persistent conflict with merchants comes as Scharf says he is striving to repair damaged relationships with retailers.
“It’s going to take a long time to change the dialogue,” he notes. The settlement has a US district court judge’s preliminary approval, and a hearing for final approval is scheduled for Sept. 12.
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