Class Action Lawsuit Credit Card Fees: A Comprehensive Guide to the Visa/Mastercard Settlement

A class action lawsuit against Visa and Mastercard led to a significant settlement in 2012, resulting in billions of dollars being refunded to consumers.

The lawsuit alleged that Visa and Mastercard conspired to fix credit card fees, forcing merchants to pay higher rates.

This settlement affected millions of consumers, who were entitled to receive refunds on certain credit card fees.

The average refund amount was around $40 per consumer.

If your business accepted Visa or Mastercard credit or debit cards between January 1, 2004, and January 25, 2019, you're eligible to file a claim.

This period is quite long, so many businesses likely accepted these cards during this time. Businesses in a wide range of industries, such as restaurants, retail stores, medical offices, gas stations, and hotel groups, are included.

Even if your business has since closed or gone bankrupt, you can still submit a claim, as long as you accepted Visa or Mastercard cards during the specified period.

The proposed settlement aimed to compensate businesses for over 15 years of inflated costs due to Visa and Mastercard's anti-competitive practices.

Under the preliminary settlement, the card companies agreed to maintain the existing swipe fee rates until December 31, 2023, for a period of five years.

Visa and Mastercard also agreed to remove anti-competitive restrictions, allowing merchants to suggest alternative card options to customers.

Merchants will now be able to impose surcharges on customers depending on the type of Visa or Mastercard card they use, which could affect cardholders who receive rewards like cash back and airline miles.

The settlement was granted preliminary approval by United States District Judge John Gleeson on November 27, 2012.

The deadline to file a claim in this class action lawsuit has recently been extended to February 4, 2025.

To initiate the claim process, businesses need only provide their employer identification number (EIN), making the initial steps relatively straightforward.

Filing a claim is done online through the official settlement website, where you can find detailed instructions and submit your claim.

It's a good idea to consult with financial advisors or firms specializing in credit card claims to ensure all necessary information is accurately provided and to maximize the potential recovery.

Plaintiffs allege that credit card issuers, including Visa and Mastercard, engaged in a conspiracy to fix interchange fees at artificially high levels.

Filing a claim is a straightforward process that requires timely action. The deadline to file a claim was recently extended to February 4, 2025.

Businesses need only provide their employer identification number (EIN) to initiate the claim process. No proof of hidden fees is necessary at this point.

To file a claim, businesses should visit the official settlement website, where they can find detailed instructions and submit their claims online. It's advisable to consult with financial advisors or firms specializing in credit card claims to help ensure all necessary information is accurately provided and to maximize the potential recovery.

Plaintiffs allege that Visa, Mastercard, and other major credit card issuers engaged in a conspiracy to fix interchange fees, also known as swipe fees, at artificially high levels.

Immediately after preliminary approval of the settlement in November 2012, a group of plaintiffs appealed to have it invalidated.

The plaintiffs argued that the settlement violated their rights by not allowing them to opt out of certain provisions, specifically the litigation releases that bar future suits.

In January 2013, the United States Court of Appeals for the Second Circuit ruled that any appeals against the settlement would not be heard until objections to the settlement were filed and considered by the trial court in September 2013.

This allowed settlement notices to be sent to eligible merchants, despite the ongoing appeal.

In June 2016, the United States Court of Appeals for the Second Circuit overturned the settlement, citing concerns that class counsel could not adequately represent merchants with significant interests in monetary relief.

In December 2013, U.S. District Court Judge John Gleeson approved a settlement that was later reversed. Judge Gleeson appointed Alan Sykes as an independent expert to help him evaluate the proposed settlement.

Alan Sykes is a professor at New York University's law school, and he has a strong background in economics and trade. He previously taught at Stanford and the University of Chicago.

Judge Gleeson considered Sykes for the role of independent expert as early as March 2013. He informed the parties in court about his consideration, but no one objected to the appointment.

The role of an independent expert in a court case is relatively rare. Judges usually rely on experts provided by the parties involved, but Judge Gleeson chose to appoint his own expert in this case.

The settlement that was approved in December 2013 was valued at $7.25 billion, but it was later reversed. A new settlement for $6.24 billion is currently scheduled to go before the district court on November 7, 2019.

The case is formally known as In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, with a docket number of 05-md-01720. This case is ongoing.

The venue for this case is the United States District Court in the Eastern District of New York in Brooklyn.

The financial and legal aspects of a class action lawsuit against credit card fees can be complex, but let's break it down.

Law firms appointed to lead the case have asked for $720 million in fees, which would be one of the largest awards of legal fees in American history if approved. Approval of these fees partially depends on the approval of the settlement.

The distribution of fees is decided by lead counsel and will be split among about 40 different law firms.

Businesses can recover a significant amount of money by reclaiming hidden fees paid over the years. Estimates suggest that businesses could recover between $3,000 and $5,000 for every $1 million in credit card charges processed.

This might seem modest on a per-million basis, but it represents a substantial opportunity for businesses with high transaction volumes. For example, a business that processes $10 million in credit card charges could potentially recover $30,000 to $50,000.

The U.S. Department of Justice filed a civil antitrust lawsuit against Visa in September 2024, alleging monopolization and other unlawful conduct.

A significant settlement was announced in March 2024, aimed at reducing "swipe fees" for merchants in the U.S. This change is expected to save retailers about $30 billion over five years.

As part of the settlement, Visa and Mastercard agreed to lower their processing fees at all US merchants by at least four basis points for the next three years, ensuring these reduced rates stick for a total of five years.

The deal included a provision that the reduced fees must be at least seven basis points lower than the current average, which will be reviewed by an independent auditor.

Visa's CEO stated that the company is seeking a new settlement, which could occur before, during, or even following a trial.

The legal fees in this case are staggering. In April 2013, the three law firms appointed to lead the plaintiffs asked for $720 million in fees.

This amount represents about 4.5 times what would normally be billed at an hourly rate for the work performed. The law firms in question are Robins, Kaplan, Miller & Ciresi; Berger Montague; and Robbins Geller Rudman & Dowd LLP.

If approved, this would be one of the largest awards of legal fees in American history.

Big retailers and small businesses have vastly different opinions on the preliminary settlement with Visa and Mastercard. Over 90% of the merchants who agreed to the settlement were small businesses.

The National Federation of Independent Business saw the settlement as temporary relief for small businesses. The Merchants Payments Coalition, representing big retailers, was even more critical, calling the settlement insufficient.

Big retailers like Target, CVS, and Dollar General applauded the judge's ruling, saying it would not provide the meaningful change needed to correct the competitive imbalance in the interchange ecosystem. A Mastercard spokesperson expressed disappointment with the ruling, saying the settlement presented a fair resolution.

As a small retailer, Glenn Licht of Pescatore Seafood Company in New York, felt the effects of swipe fees. His business operates two seafood stores in New York City's Grand Central Terminal market, with 80% of payments now being credit cards.