PURCHASE, N.Y. - In a possibly precedent setting decision, MasterCard International has convinced a Federal Court to dismiss allegations that its policy of assessing additional charges on merchants who have an excessive number of chargebacks on their MasterCard accounts is illegal. MasterCard lawyers say the win may influence two other similar cases and represents the first time since the two Card brands settled with merchants that a federal court has found against plaintiffs who have charged that a MasterCard policy is anti-competitive. "MasterCard is pleased that the court agreed that the plaintiff, an aggregator of payment services, failed to demonstrate that the policies at issue in this case harm competition. The judge also recognized that the plaintiff has multiple options for accepting payment, and could choose not to participate in our network," said Eileen Simon, MasterCard associate general counsel. The complaint originated with PayCom Billing Services, a credit card billing aggregator, many of whose clients are distributors of online pornography. PayCom alleged in its suit that MasterCard's policy of charging higher fees to businesses with significantly higher than average chargebacks made its business, and theirs, less competitive. Simon countered that MasterCard charges higher fees for greater than average chargebacks because greater than average chargebacks are one key indicator of fraud. "Our responsibility is to protect our issuers and the businesses that have reasons to use our chargeback feature," Simon said. As an industry adult oriented Internet sites have a notoriously high chargeback average, according to ecommerce experts. Simon said that MasterCard found the decision especially encouraging because Judge David Trager recognized the distinction between a policy which hurt competition and could be considered anti-competitive and a policy which merely hurt an individual firm's ability to compete. The court's ruling recognized that Paycom is free to stop accepting MasterCard on behalf of its clients, or to urge its clients' customers to pay with other payment cards. The judge ruled that the plaintiff could not demonstrate that MasterCard's policies harmed competition. "We are pleased that Judge Trager recognized that antitrust laws are designed to protect competition, not individual competitors," Simon said.