Earlier this summer credit card companies and banks offered a settlement in a class action lawsuit brought by merchants over alleged price-fixing of their fees. The plaintiffs who are a part of the class that is suing are companies of various sizes that deal with regular credit card transactions that incur fees from banks and credit card companies. In addition to the named plaintiffs who have officially joined the class, trade associations are also involved, as is an attorney representing qualified merchants who may not be aware of the lawsuit or haven't joined it formally.
The basic accusation in this ongoing litigation is that the credit card companies and the banks were coordinating their pricing to eliminate competition and raise transaction fees across the board. The credit card companies and banks offered a settlement earlier this year that would have given merchants cash payments and temporary rate reductions, along with some changes to the contracts that they have with merchants that would give greater flexibility on fees.
However, one of the major problems with this offer was that accepting it also meant that merchants would be unable to sue the credit card companies or banks in the future for related claims if the problem wasn't truly solved.
Last week, four grocery store chains issued a statement indicating that they would fight the settlement offer. This means that more than half of the named plaintiffs in the suit are now against the offer negotiated by their attorneys.
The end result of this case will be highly influential for businesses of all sizes in Virginia and around the country who rely heavily on credit card transactions. The ongoing resistance on the part of the merchants to settle the case may be an attempt to leverage their collective buying power against the big banks and credit card companies that usually hold most of the cards.
Source: New York Times, "Merchant Plaintiffs Line Up Against Credit Card Settlement," Robb Mandlebaum, Oct. 15, 2012.
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