A growing number of associations and retailers among the plaintiffs in the swipe fee class action suit, including the National Restaurant Association, NATSO and others, are voicing opposition to the proposed settlement. According to the National Association of Convenience Stores (NACS) Daily News, participants in a recent conference call acknowledged the uniqueness of forcing a settlement, subject to objections from such a large number of affected parties, insisting that approval of the settlement would constitute a breach of due process.
However, U.S. District Court Judge, John Gleeson, stated that the settlement appeared to meet requirements for preliminary approval, though he noted that the threshold for preliminary approval of proposed class-action settlements is, “meaningfully lower,” than that for final approval. A hearing on the settlement is expected to occur this month or January. As it presently stands, the deal on the table requires MasterCard, Visa and the banks issuing their cards to reimburse as many as seven million retailers for interchange fees that averaged around $0.44 per transaction, and to provide an eight-month fee discount. The settlement would total $7.25 billion, with $6.05 billion going directly to retailers, and $1.2 billion accumulated by the temporary swipe fee reduction.
The NACS found the following procedural issues with the proposed settlement:
• Lawyers filed the settlement without first obtaining client approval.
• Lawyers failed to address significant client concerns.
• The involved plaintiffs wish to serve a broader purpose, by shedding light on retail issues via an actual trial.
Additionally, teleconference participants discussed the possibilities of surcharges and the effect of price fixing, as a direct result of the settlement. “The settlement is complex and difficult for small businesses to navigate and therefore realize benefits,” the NACS said. “The issue remains critical for small businesses, with swipe fees being the fastest-growing business expense.” Should the settlement progress, merchants will have 30 days to file objections and attempt to pursue a trial in court.
National Associations Becoming More Involved
The National Cooperative Grocers Association and the National Association of Convenience Stores plan to fight the settlement in court, Jeffrey Shinder, a lawyer for the groups, reportedly said. “There are serious issues with the settlement. The trade association named plaintiffs who came out against it; all of the members of their boards, flesh and blood merchants, voted against it,” Shinder remarked. The convenience store group, which issued its statement within minutes of the settlement’s disclosure on July 13, said the deal amounts to only two months’ worth of roughly $50 billion in swipe fees collected annually by payment networks. The deal also doesn’t prevent Visa or MasterCard from raising fees in the future, the group said. Other measures under the deal would only be allowed under strict oversight of Visa and MasterCard, making them “unworkable” for merchants, the group said.
Target said in a statement that the proposed settlement would, “perpetuate a broken system.” Walmart issued a statement that encouraged, “all merchants to put consumers first and reject the settlement.” The accord followed roughly a seven year legal battle, according to lawyers for the plaintiffs. “This settlement agreement is the result of seven years of negotiation, which makes us confident that the court will agree that this is fair to all parties,” Trish Wexler, a spokeswoman for the Electronic Payments Coalition, said in a statement. “The recent statements that we’ve heard from a handful of retailers are nothing new, and have already been considered during the course of this long negotiation.”