NRF asks judge to reject swipe fee settlement
WASHINGTON (AP) — The National Retail Federation and more than a dozen of the nation's retailers have asked a judge to reject a proposed $7.25 billion settlement that Visa Inc., MasterCard Inc. and major banks have agreed to pay retailers for alleged fee fixing.
Visa and MasterCard agreed in July to settle a lawsuit brought by several retailers that claimed card issuers conspired to fix merchants' fees for accepting credit cards.
Retailers have long complained about the billions of dollars they pay for shoppers who use plastic for their purchases. Debit swipe fees were capped last year but credit card swipe fees remain unregulated and average about 2 percent of each transaction.
Under the settlement, stores will be allowed to charge customers more if they pay with a credit card. The settlement covers only U.S. transactions.
NRF, which is not a party to the lawsuit that led to the settlement, says it believes the proposed settlement will not stop swipe fees from continuing to rise.
The industry group argued in a brief filed Thursday that preliminary approval of the settlement should be denied, saying it should not be eligible for class-action status because it would force a one-size-fits-all solution onto a diverse group of merchants. NRF also argued that a provision barring all retailers, including those who opt out of the settlement, from filing future lawsuits over swipe fees is too broad.
The NRF represents more than 9,000 retailers of various sizes, including chain restaurants and industry partners, from the U.S. and 45 other countries. The industry group filed the brief in U.S. District Court in New York along with 17 companies, such as Target Corp., Macy's Inc. and J.C. Penney Corp., and two associations, which are not parties to the suit but would be affected by the settlement.
A group of nine smaller merchants supporting the settlement already filed a brief seeking preliminary approval of the proposal. Oral arguments in the case are scheduled for Nov. 9. Arguments on the merits of the settlement and whether it should be given final approval will not begin until sometime next year, according to the NRF.
Credit card companies have long defended the fees they charge stores. They say stores benefit from being able to accept credit and debit cards from customers, who often spend more when they're using plastic instead of cash or checks.
Visa said Thursday that it stood by its earlier statements that the settlement is a fair and reasonable compromise that is the result of more than two years of negotiations and will bring an end to nearly 10 years of repeated legal changes against the fee system. The company is confident the court will approve the settlement in the best interests of all parties.
Mastercard's general counsel Noah Hanft said in the company's earnings call Wednesday that the prospects are good that the court will approve the deal.