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Retailer suit targets EMV mandate


It was probably inevitable that somebody at some point would challenge the legality of the Oct. 1, 2015 EMV (Europay, Mastercard and Visa) liability shift.

Two Florida retailers have filed the first federal class action lawsuit in response to the EMV mandate. Law firms Robbins Geller Rudman & Dowd LLP and Devine Goodman Rasco & Watts-FitzGerald LLP are handling the suit against the four largest U.S. credit card companies and some of the country's biggest banks for allegedly conspiring to shift the responsibility for billions of dollars in fraudulent credit card charges away from themselves and to retailers.

The lawsuit, B&R Supermarket, Inc., et al v. Visa, Inc., et al, Case Number 3:16-cv-01150-WHA, was filed March 8, 2016, and is proceeding before U.S. District Court Judge William H. Alsup in the Northern District of California. It centers on the changeover from magnetic-stripe payment cards to modern cards containing computer chips, known as EMV cards.

In the U.S., several of the payment card companies together formed a company called EMVCo, LLC, which develops the technology and sets the standards for its use. EMVCo is one of the defendants in the lawsuit.

In particular, the suit alleges that the process of “certification” for a retailer to prove they have adopted the proper equipment to securely accept EMV-compliant payments is a “murky, nebulous” process controlled by the defendants, who benefit from the existence of uncertified retailers that will absorb the liability for fraudulent payment card transactions.

In the first five months after the liability shift, Milam's Markets, a South Florida grocery store chain, and Grove Liquors, a Miami liquor shop, claim they were assessed more than $10,000 in chargebacks for fraudulent transactions, compared with virtually none for the same period the year before.

The lawsuit alleges that the defendants knew in advance that certification would be delayed or impossible for millions of merchants, but the defendants went ahead with the shift anyway, because they would benefit by shifting the billions of dollars in chargebacks from themselves to the merchants.

The defendants named in the lawsuit are: Visa Inc. and Visa USA Inc.; MasterCard International Inc.; American Express Co.; Discover Financial Services; Bank of America N.A.; Barclays Bank Delaware; Capital One Financial Corp.

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