NRF and retailers to U.S. Supreme Court: Let swipe card fees ruling stand

Payment card fees are a sore subject for the retail industry — especially with the possibility that a settlement is being revisited by parties seeking an appeal.



The National Retail Federation and the Retail Industry Leaders Associa-tion requested that the U.S. Supreme Court let stand an appeals court rul-ing that struck down a controversial 2012 settlement of a class action lawsuit over Visa and MasterCard’s swipe card fees.



The 2nd U.S. Circuit Court of Appeals last year squashed a $7.25 billion antitrust settlement approved by U.S. District Court Judge John Gleeson in a 2005 lawsuit brought by a small group of retailers and trade associa-tions claiming to represent the retail industry. At the time, Gleeson ap-proved the settlement even though NRF and others argued that it failed to reform the price-fixing system under which Visa and MasterCard set fees for credit cards issued by thousands of banks.



Rather than lower the fees, the card companies proposed in the settlement that they be passed along to consumers as a surcharge. Major retailers re-jected the surcharge proposal, saying it was the opposite of what they sought, while small retailers would have seen as little as a few hundred dollars each. Retailers who rejected the monetary settlement would have still been bound by other restrictions the court would not let them opt out of, including a prohibition on future lawsuits over the fees.



“This alleged ‘settlement’ was a backroom deal that would have done no-thing to end price fixing or keep swipe fees from soaring in the future,” NRF senior VP and general counsel Mallory Duncan said. “Even worse, it includes a provision that would keep merchants from ever suing over this issue again. The Circuit Court did the right thing in tossing this case out and it should not be revived. There are ways to bring swipe fees un-der control but this settlement is not one of them.”



He continued, “This is not just a business-to-business dispute. These fees drive up the price of retail merchandise, costing the average family hun-dreds of dollars a year in added expenses.”



In 2014, NRF asked the 2nd Circuit to overturn the settlement, saying a broad cross section of the retail industry ranging from independent Main Street stores to national chains opposed the deal. The appeals court ruled in NRF’s favor last year, saying that merchants “were inadequately repre-sented” in the case.



That ruling, however, has been appealed to the Supreme Court by some of the original plaintiffs.



“The settlement itself achieved nothing important for merchants that ac-cept credit cards, which is why every prominent group that represents merchants has opposed it,” NRF and RILA said in a joint brief filed Wednesday, Feb. 22, with the Supreme Court. “This deal is a bad one, unworthy of resuscitation.”