Two trade associations of retailers have filed briefs with the U.S. District Court hearing the long-standing card interchange suit to reject the proposed settlement of that suit.
U.S. District Court Judge John Gleeson has presided over a more than two-year mediated negotiation between major card issuers, the card brands and retailers to settle complaints over how card interchange is negotiated and calculated. The case has reached the settlement stage, and retail groups have been protesting the proposed deal.
“The proposal pending before the court does nothing to keep these soaring fees from continuing to drive prices higher for American consumers, and would block merchants who believe in true swipe fee reform from ever having their day in court,” National Retail Federation Senior Vice President and General Counsel Mallory Duncan said.
The NRF was not a party to the litigation. “While the remaining parties would like to treat preliminary approval as a routine procedural step, the court should recognize that this settlement is so legally flawed it cannot be tweaked into fairness,” Duncan said. “We question whose interests are being served here – merchants and their customers or the card companies and lawyers,” Duncan said. “Instead of improving the situation, the proposed settlement would cast in stone the very problems that need to be fixed. And while the settlement gives pennies on the dollar to merchants, it seeks three-quarters of a billion dollars for the lawyers involved.
“Sophisticated retailers who have scrutinized the tentative deal realize it provides relief for no one, and don’t want this blatant endorsement of the credit card industry’s abuses pushed on them or their customers.”
The National Grocers Association also delivered a broadside against the proposed deal.
"The NGA Board of Directors from the outset made it crystal clear that NGA was not motivated by money damages, but reform of the collusive establishment of interchange fees and enforcement of anti-competitive rules by the credit card companies and banks that unfairly restrict merchants' freedom to operate," stated Peter J. Larkin, NGA president/CEO.
But the Electronic Payments Coalition maintains its position that the proposed settlement was arrived at after two years of sharply mediated negotiations in which the NGA and other protesting groups took part.
They also maintain the settlement was a true compromise where each group of litigants gave up something in order to settle the case.