NEW YORK -- A group of retailers and trade groups has launched a last-ditch effort to stop a proposed multibillion-dollar settlement that Visa Inc., MasterCard Inc. and major banks have agreed to pay retailers for alleged fee fixing.
Ten out of the 19 retailers and trade groups that are parties to the class-action lawsuit against the credit card companies say they're trying to block the deal because they believe it would allow the credit card industry to continue to take advantage of merchants and their customers while stopping competition.
The proposed settlement, which was disclosed in July, is expected to be submitted to the U.S. District Court in Brooklyn by Oct. 19. Merchants objecting to the deal will then have 30 days to submit arguments urging the court to reject the proposal.
"There is strong concern among our member companies that the proposed settlement will not achieve the litigation's most critical goal – to fundamentally change a broken marketplace in which swipe fees are set," said Dawn Sweeney, president and CEO for the National Restaurant Association, one of the plaintiffs opposing the settlement. "We don't expect any settlement to address every flaw of the current system, but we cannot allow it to lock in the worst elements."
Other plaintiffs objecting to the settlement include the National Association of Convenience Stores, D'Agostino Supermarkets, National Grocers Association and National Community Pharmacists Association. Their actions come as other retailers including Wal-Mart Stores Inc. and Target Corp. that are not part of the class-action suit have expressed objections.
The National Retail Federation, the nation's largest retail trade group that is also not a party, is filing its opposition with the court. It is made of up more than 9,000 retailers.
Trish Wexler, a spokesman for the Electronic Payment Coalition, a trade group made up of Visa and MasterCard, believes the objections are politically motivated. She says they are trying to mount a case for legislation to curb credit card swipe fees.
"This is their job, to throw bombs and to make noise and to march up to Capitol Hill with their hands out," she said.
Officials at MasterCard and Visa could not be immediately reached.
In July, Visa, Mastercard and the banks settled a lawsuit brought by several retailers that claimed card issuers conspired to fix merchants' fees for accepting credit cards. Retailers have long complained about the billions of dollars in "swipe" or "interchange" fees that they have had to pay, which average about 2 percent of the price of a purchase.
Under the settlement, stores will be allowed to charge customers more if they pay with a credit card. The settlement covers only U.S. transactions. But the plaintiffs says that the settlement will not stop swipe fees from continuing to rise which will hurt both retailers and shoppers, and that it will prevent any future legal challenges.