Natso Rejects $7.25 Billion Settlement in Lawsuit Over Credit Card Swipe Fees
This story appears in the Sept. 17 print edition of Transport Topics.
Natso said last week it had rejected a settlement offer from major banks and credit card networks to end a lawsuit involving credit card swipe fees, saying it does not go far enough to reform a “broken system.”
The $7.25 billion settlement offered in July to Natso, which represents truck stops, and other groups, “lacks meaningful fixes to a system that allowed Visa and MasterCard to set artificially high swipe fees and provided retailers and consumers with no choice except to pay,” Natso President Lisa Mullings said in a Sept. 10 statement.
Natso did not indicate what steps it will take next in its seven-year battle against Visa Inc., MasterCard Inc. and more than a dozen major banks.
Natso is a lead plaintiff in the lawsuit, which alleges that the banks and credit card networks illegally colluded to set and maintain high interchange fees — the per-transaction fees that merchants must pay to process credit card payments.
Despite the rejection from Natso and some other lead plaintiffs, a federal court still could approve the settlement. A judge did not take any action at a Sept. 11 hearing on the settlement, but K. Craig Wildfang, an attorney representing some plaintiffs, told Bloomberg News said he believes the settlement will be approved.
The Electronic Payments Coalition, which represents banks and credit card companies, similarly believes the settlement will be approved.
“It’s not entirely surprising,” spokeswoman Trish Wexler told Transport Topics about Natso’s decision to reject the terms.
The court will weigh plaintiffs’ comments on the settlement and make a decision on whether it can go forward, likely early next year, said Jeff Lerner, a spokesman for the National Association of Convenience Stores. NACS rejected the settlement shortly after it was announced in July.
It is unclear whether those plaintiffs will be able to continue legal action or be subject to the settlement terms if the court approves them.
In addition to NACS, the National Grocers Association, the National Cooperative Grocers Association and the National Community Pharmacists Association have joined Natso in saying they will continue to fight the case in court.
“NGA joined the lawsuit on behalf of its independent retail grocer members over seven years ago to bring about real reform of the anticompetitive credit card swipe fee system,” NGA President Peter Larkin said in a statement. “This proposed settlement agreement fails in this regard by allowing Visa and MasterCard to continue their dominant anticompetitive practices.”
The National Retail Federation, though not a plaintiff in the lawsuit, vowed to fight the proposed settlement if it needed to. It announced Sept. 11 that its board of directors authorized such court action.
“The National Retail Federation categorically opposes the proposed settlement,” NRF President Matthew Shay said in a statement. “NRF will take any and all steps necessary to oppose the settlement as it is currently proposed and will work toward real reform of the swipe fee system.”
The settlement offered in July includes about $6.05 billion in damages, plus a temporary reduction in interchange fees worth about $1.2 billion. It is the largest settlement offer in the history of antitrust law since the Sherman Act of 1890, one of the firms representing plaintiffs said (7-23, p. 27).
It also would allow retailers to charge fees to most customers for using credit cards, up to the amount charged by the credit card company.
