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Largely silent until now, merchants who support the the $7.5 billion settlement over credit card interchange fees have a message for the more vocal dissenters: take the deal and move on.
October 25 -
An analysis from Keefe, Bruyette & Woods concludes that many more retailers would need to withdraw from the settlement with Visa and MasterCard to trigger a termination clause.
July 25
A group of some of the nation’s largest merchants and retail trade groups asked a federal judge Thursday to reject the proposed settlement of a lawsuit over credit card swipe fees.
Signing on to the court filing were numerous retail heavyweights, including Target, Macy’s, J.C. Penney, The Gap, Neiman Marcus, Abercrombie & Fitch, Papa John’s, as well as the National Retail Federation, which calls itself the world’s largest retail trade association.
The proposed settlement reached over the summer would require Visa (NYSE: V), MasterCard (MA), and several of the nation’s largest banks to pay $7.25 billion to merchants who claimed that swipe fees charged by the card networks were excessive.
But many retailers argue that the deal would not bring fees under control, and would not provide an adequate opt-out mechanism to merchants that object to its terms.
“We question whose interests are being served here – merchants and their customers or the card companies and lawyers,” Mallory Duncan, senior vice president and general counsel of the National Retail Federation, said in a news release.
“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,” Duncan added.
The proposed settlement would grant merchants the right to add surcharges to credit card purchases, though some states currently have laws that prevent surcharging. The card networks and banks that are defendants in the suit would maintain the right to determine swipe fee prices, and they would also get a broad release from future lawsuits.
The settlement agreement is subject to a two-stage approval process before Judge John Gleeson in the U.S District Court for the Eastern District of New York. Gleeson recently established a tight timeframe for the preliminary approval process, and indicated that he is inclined to let the agreement pass over the first hurdle.
The retailers who filed Thursday’s motion in the argued that preliminary approval should be denied because it would impose a single remedy on an extremely diverse group of retailers. They further argued that the deal’s opt-out mechanism, which gets triggered if 25% of merchants nationwide object, is unfair.
Other briefs opposing the settlement deal were filed Thursday by retailers representing 1,200 merchants, according to a news release from the Retail Industry Leaders Association. Among the dissenting merchants it named were AutoZone, Best Buy, Dick’s Sporting Goods, and The Home Depot.
Also objecting to the deal Thursday were 10 of the 19 earlier plaintiffs in the case. Only nine of the 19 signed onto a court filing are seeking the judge’s approval.
