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NRF asks judge to reject swipe-fee settlement

Washington -- The National Retail Federation and more than a dozen of the nation’s most prominent retailers today asked a judge to reject a proposed class-action settlement of a federal antitrust lawsuit, saying it would not bring credit card swipe fees charged by Visa and MasterCard under control and does not give retailers who oppose it an adequate mechanism to opt out.

“The proposal pending before the court does nothing to keep these soaring fees from continuing to drive prices higher for American consumers, and would block merchants who believe in true swipe fee reform from ever having their day in court,” NRF senior VP and general counsel Mallory Duncan said. “While the remaining parties would like to treat preliminary approval as a routine procedural step, the court should recognize that this settlement is so legally flawed it cannot be tweaked into fairness.”

“We question whose interests are being served here – merchants and their customers or the card companies and lawyers,” Duncan continued. “Instead of improving the situation, the proposed settlement would cast in stone the very problems that need to be fixed. And while the settlement gives pennies on the dollar to merchants, it seeks three-quarters of a billion dollars for the lawyers involved. Sophisticated retailers who have scrutinized the tentative deal realize it provides relief for no one, and don’t want this blatant endorsement of the credit card industry’s abuses pushed on them or their customers.”

Nine mostly small merchants supporting the settlement filed a motion with U.S. District Court Judge John Gleeson in Brooklyn, N.Y., on Oct. 19 asking for preliminary approval of the proposal, and oral arguments are scheduled for Nov. 9. Preliminary approval would begin a months-long process in which all retailers who accept Visa and MasterCard credit cards would be sent notices giving them the opportunity to either accept the settlement or opt out of part of it.

Arguments on the merits of the settlement and whether it should be given final approval would not begin until sometime next year. NRF argued in a brief filed Thursday that preliminary approval should be denied, saying the settlement cannot legally be certified as a class action because it attempts to force a one-size-fits-all solution onto a wildly diverse group of merchants.

NRF also argued that a provision barring all retailers – including those who opt out of the settlement and even those who do not yet exist – from filing future lawsuits over swipe fees is impermissibly broad under federal law.

 

© 2014