Legal settlements usually settle disputes, but a proposed $7.25 billion class-action settlement involving Visa and MasterCard appears to be erupting into a whole new battle over the fees retailers have to pay when consumers pull out their plastic.
Scores of angry retailers — from Wal-Mart and Starbucks to Target and Domino’s Pizza — opted out of the historic settlement by last week’s deadline and filed formal objections for U.S. District Judge John Gleeson in Brooklyn to consider. Some, such as Target Corp. and Macy’s Inc., have struck back with a new lawsuit seeking damages.
They are walking away from what’s regarded as the largest private antitrust class-action settlement in the nation’s history, one that involves more than 7 million businesses — just about every entity that swiped a Visa or MasterCard credit or debit card since 2004.
“It’s extraordinarily rare for a class settlement to be rejected because of concerns raised by class members,” said David Fink of Fink and Associates Law in Bloomfield Hills, Mich., who specializes in class-action litigation.
At the heart of the battle are allegations that Visa, MasterCard and a group of card-issuing banks illegally colluded since 2004 to fix the swipe fees merchants pay to process cards. The interchange fees average about 2 percent of every purchase at the register and total about $30 billion a year.
Many retailers say the swipe fees rival their health care costs as a significant operating expense. The National Retail Federation estimates the swipe fees drive up consumer costs by more than $250 a year for the average household.