Mastercard facing €22bn lawsuit over fees

Jul 7, 2016 | Financial Mis-selling

Mastercard facing €22bn lawsuit over feesMastercard facing €22bn lawsuit over fees

One of the biggest class actions in UK history is being faced by Mastercard over card charges that were passed on to shoppers. Walter Merricks (the ex Financial Services Ombudsman) is heading the claim and is using the UK’s Consumer Rights Act 2015 to file the claim for collective damages.

It is claimed that Mastercard unlawfully imposed high interchange fees. This is a charge imposed when shoppers swipe their credit or debit cards between 1992 to 2008. This charge was then passed on to consumers resulting in inflated prices for goods and services.

In 2014 The European Court of Justice deemed such fees to be a violation of EU antitrust rules. In 2015 an interchange fee regulation was adopted by the European Parliament and the Council of the European Union, which capped at 0.2% for debit cards and 0.3% for credit cards.

According to reports , as many as 40 million people could be entitled to compensation. Merrick has spoken out stating:

“I want consumers to know that it is possible to take on a large organisation that has behaved badly. The prices of everything we all bought from 1992 to 2008 were higher than they should have been as a result of the unlawful conduct of Mastercard.”

The case will be heard before the Competition Appeal Tribunal which is a specialist court that hears competition law disputes, and is due to commence in September.

Mastercard representatives have responded by stating:

“To be clear, the claim hasn’t been filed yet and detail of how his (Walter Merrick’) team got to £19 billion, hasn’t yet been shared.”

Mastercard representatives have firmly disagreed with the claims, emphasising that the European Commission decision related to transactions that crossed borders within the EU and that the decision did not touch on UK intercharge fees.

Mastercard added:

“There are costs to making a payment. In our system, the costs of making a payment are shared by all of those who benefit from the payment – the consumer, the card issuer, the retailer and the acquirer (the retailer’s or merchant’s bank). All pay a small portion of the cost. By sharing costs among all of those who benefit from the transaction, consumers and merchants obtain the full value of our technology at costs that are much lower than they could achieve if they paid the costs on their own.”

Consumer rights campaigners allege that not only did retailers pass down the charges on to the consumers in the form of higher prices for goods and services over a period of 16 years, the shoppers were also kept in the dark about the extra charges they were being forced to pay.

Walter Merricks has hired Quinn Emanuel Urquhart and Sullivan to draft a lawsuit, which they plan to file in September.


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