Payback: Card Lawsuit Payout to Retailers
An antitrust lawsuit settlement will force Visa and MasterCard to make a $1.1 billion dollar payout to retailers. AP reports that the payout was the result of a class action antitrust lawsuit that claimed that both Visa and MasterCard attempted to fix prices and restrict trade.
The suit was over Visa and Mastercard having forced merchants to accept their signature debit cards if they wanted to accept their credit cards. The debit cards, by the way, featured some hefty transaction fees.
News of card companies paying out no doubt sounds nice to merchants who have been battling soaring interchange fees levied on retailers who want to accept plastic.
To retailers, this settlement disbursement is going to be a nice holiday surprise. Many small business retailers have noticed that holiday spending is lower because of the recession. Tracy Mullin, President and CEO of the National Retail Federation, told AP: "The timing of these checks couldn't be better. They come during a difficult holiday season and will help retailers position themselves to participate in the economic recovery that lies ahead."
According to a press release from the law firm Constantine Cannon LLP, since retail operating margins for most retailers are averaging less than 5 percent, the $1.1 billion payment is the equivalent to a $22 billion increase in merchants' overall holiday revenue.
This has been something that small businesses have needed. Jeffrey I. Shinder, Managing Partner of the New York office of Constantine Cannon, said: "This is likely the largest single payment to businesses in a class action in history, and it comes at a time when banks have all but stopped lending to the smaller retailers that make up the backbone of the class." The payout may be just what retailers needed in order to retain workers and stay afloat in their business.
Constantine Cannon partner
More than 90% of the recipients of this payout are retailers. The remaining 10% are charitable organizations and state government agencies.
For more information, please visit our Related Resources:
- Soaring Interchange Fees Charged by Credit Card Companies, Targeted by Merchants (FindLaw's Free Enterprise)
- Legal Dictionary: Antitrust & Trade Regulation (Findlaw)
- $336M Settlement OK'd in Credit Card Currency-Fee Suits (Findlaw)
- Sotomayor's Top Five Rulings on Experts (Findlaw's InHouse Blog)
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