A decade-long court battle draws to a close
Visa and Mastercard have agreed to pay a total of $199.5 million to resolve a decade-long court battle that was filed by a group of retailers who accused them of overcharging them for transactions that were subsequently rejected, although they themselves were not guilty of fraud.
The lawsuit, originally filed in 2016, is just the latest episode in the ongoing battle between big credit card companies and their merchant acceptors. While Visa and Mastercard have continued to maintain that they are in the clear, both companies decided to settle to “avoid further expense and distractions,” according to court documents.
Under the settlement terms, Visa will pay about $119.7 million, while Mastercard will pay an estimated $79.8 million. However, there is still a need for final approval by a federal judge to effect payments.
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No timetable yet for payouts
Even with the huge settlement fund, there has been no indication of when qualified retailers will be compensated. Court documents say the payout process will be determined once final approval is granted by the judge — that is, affected businesses may have to wait a few more months before they get any pay.”
For the bulk of consumers, the settlement will not directly impact them. The feud is largely between merchants who accept Visa and Mastercard payments, as opposed to individual cardholders.
However, the ruling forms part of an increasing number of settlements between big financial institutions in America, demonstrating how litigation is now a favoured way of settling disputes over transaction fees and fraud responsibility, as well as data breaches.
Other credit card companies also paying up
Visa and Mastercard do not stand alone in owing financial penalties. American Express and Discover had earlier settled on a stand-alone $32.2 million settlement on a companion case.
And that’s just one of several recent corporate payouts. For instance, AT&T is forking over $177 million to customers hit by two data breaches earlier this year. The first, in March 2024, was the theft of customer information on the dark web, followed by a second breach in July that reportedly leaked more data via a third-party site.
Those who believe they are eligible for AT&T’s payment should apply by Dec. 18, and those who want to opt out or protest should do so by Nov. 17.
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Learning about class-action settlements
The Visa and Mastercard case is a class-action lawsuit — the legal mechanism that allows groups of people or companies to sue together if they’ve been similarly harmed.
Typically, a few individuals or groups file the suit on behalf of a large group. Once companies decide to settle, they compensate aggrieved parties in exchange for dismissing the suit — typically without admitting fault.
Class actions have a wide range of topics, including fraud, discrimination, misleading advertising, and environmental pollution. Settlement of the cases is a strategic move by firms to avoid the huge cost and bad publicity of protracted litigation.
What’s next
Visa and Mastercard, meanwhile, will continue business as normal, awaiting judicial approval of the settlement. MERCHANTS included in the case will probably receive further instructions once the judge sets up a payment schedule.
Meanwhile, American consumers and companies are benefiting again from the same type of class-action settlements. Some recent examples are Facebook’s $237 settlement for its users who were victimised by concerns about data privacy and Amazon’s $2.5 million refund for subscriptions.
While the amounts look minuscule by themselves, together in bulk they show how class-action lawsuits continue to be one of the best means for Americans to hold large corporations accountable.
For now, at least, Visa and Mastercard’s near $200 million settlement is a reminder that even the world’s biggest financial giants can be held to account — and that justice, while at times glacial, ultimately prevails.
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