Retailers Continue to Challenge Interchange Fee Settlement
Target Corp., Amazon.com and a host of other retailers continue to challenge MasterCard, Visa and several large banks over the terms of a $7.25 billion settlement reached in 2013. The settlement was supposed to end the retailers’ claims that the banks and MasterCard and Visa artificially inflated interchange fees. Several of the largest retailers, however, took issue with many of the settlement’s terms and challenged them on appeal.
Most recently, in oral arguments to a three-judge panel at the Second Circuit, the retailers contended that MasterCard and Visa are attempting, through the settlement, to obtain immunity from anti-trust laws for their merchant rules. The retailers further took issue with settlement provisions that prevent retailers in the injunctive class from opting-out to pursue separate damages against the payments networks or seek changes to the merchant rules.
According to the retailers, the inability of the members of the injunctive class to opt-out is particularly detrimental to their interests because of the variety among class members. As an example, the retailers noted the settlement’s proposed relief of modifying network rules to allow merchants to impose surcharges on MasterCard and Visa transactions in certain instances was problematic because several members of the injunctive class reside in states that prohibit imposing surcharges. The retailers suggested that an opt-out class would be appropriate for the purpose of settling damages claims and that sub-classes could be used to address differences between the retailers on issues such as state laws on surcharging.
The oral arguments are the latest step in the interchange litigation that dates back to 2005.