Court of Appeals Overturns Visa/MasterCard Settlement
June 30, 2016
In a ruling made on Thursday June 30th by the Second District U.S. Court of Appeals in Manhattan, the previous approval of the Visa/MasterCard settlement has been reversed, and the district court’s certification of the class has been vacated.
No action is needed from MCAG clients at this time. Discussions are currently underway between the parties concerning changes that could be made to the settlement, in order to address the concerns raised, and/or what actions may be taken. The next formal action by the district court will be a conference/hearing with all parties representing the plaintiffs and defendants, and has been set for August 11, 2016. MCAG executives will be in attendance.
As a reminder, MCAG is not involved in the litigation for this settlement, and we do not have an opinion as to whether the previously approved terms were appropriate for merchants. MCAG’s service is available to notify businesses when they are eligible to recover cash from settlements, and to maximize returns for those who wish to have MCAG pursue a claim on their behalf.
In summary, the Court of Appeals deemed the Visa/MasterCard settlement to be too largely in favor of Visa and MasterCard by releasing claims for issues related to interchange fees in perpetuity. In addition, the appeals judges determined that the terms were not adequate for those merchants who were not yet accepting Visa/MasterCard prior to November 2012.
News of this decision has been covered by all of the major publications, including this story from Reuters, and the complete text of the opinions from the Court of Appeals can be found here.
What does this mean going forward?
Since the settlement may be revived, potentially with amended terms, MCAG will honor all enrollments received to date and any we receive in the future. The issue of alleged excessive interchange fees addressed by this settlement is not going away, and we still expect there to be a claims process. The timing of a claims process is certainly delayed, and MCAG will not have any guess as to when it may occur until further updates are released by the court.
In any case, we will continue to monitor this situation closely and update our clients accordingly so that we can mutually take the appropriate next steps moving forward.