Visa, MasterCard Class-Action Settlement Rejected by U.S. Court

By Austen Hufford 

A U.S. Court of Appeals rejected the 2012 swipe-fee settlement between the retail industry and payments companies Visa Inc. and MasterCard Inc., calling the agreement "unreasonable and inadequate."

"The benefits of litigation peace do not outweigh class members' due process right to adequate representation," the ruling said.

Visa declined to comment.

Billed at the time as the largest settlement of an antitrust class-action case in U.S. history, the deal -- reached in July 2012 and originally valued at $7.25 billion -- was to end years of litigation brought by merchants against Visa and MasterCard and several large banks that issue the companies' credit cards, including Bank of America Corp. and J.P. Morgan Chase & Co.

Lawsuits filed by trade groups and several retailers in 2005 accused Visa and MasterCard of conspiring with banks to set so-called swipe fees on credit-card transactions at arbitrarily high levels. The fees, also called interchange fees, are set by Visa and MasterCard and flow to banks that issue cards as revenue each time a customer swipes a card at a merchant.

The settlement reignited a long-running battle over credit-card transaction fees, with big-box merchants and retail trade groups making their case for why the deal should be blocked.

"We conclude that the class plaintiffs were inadequately represented," the court wrote.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

June 30, 2016 11:45 ET (15:45 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.