Credit Card Plaintiffs Get Class-Action Status

A judge granted class-action status Wednesday to several of the nation’s largest retailers and smaller merchants in an $8.1-billion antitrust challenge to fees charged by Visa and MasterCard for debit cards.

U.S. District Judge John Gleeson in Brooklyn gave the retailers and merchants the pretrial legal victory, but otherwise made it clear in his 45-page written decision that he was not ruling on the merits of the case.

He also encouraged the parties to appeal his ruling on class-action status, saying the issue “raises substantial and novel questions involving the standards a district court should apply in evaluating a class motion and the interaction of those standards with antitrust principles.”

The 3-year-old lawsuit accuses Visa USA Inc. and MasterCard International of using a monopoly in credit cards since 1992 to force businesses to pay exorbitant transaction fees to accept debit cards. The $8.1-billion damage estimate is the amount businesses contend they were overcharged by the credit card companies. If the retailers win, the damage award could triple under antitrust law to $24.3 billion.

A trial is set to begin Nov. 27. The class of plaintiffs will now consist of about 4 million merchants, including Wal-Mart Stores Inc.; Sears, Roebuck & Co.; Safeway Stores Inc.; Circuit City Stores Inc.; and the National Retail Federation.

Kelly Presta, a Visa spokesman, said the company will appeal the ruling. He predicted Visa will win the case at trial.

Sharon Gamsin, a spokeswoman for MasterCard, said the company also planned an appeal, saying the “lawsuit is without merit.”

Businesses typically pay fees ranging from 1% to 2% of the amount spent by a customer each time a credit or debit card is used. Generally, the amount of each credit or debit card transaction is deposited into the bank account of the business within a day or so.

But the lawsuit contends that the transaction fee for debit cards should be much lower because the cards pose a much lower risk for credit card companies because money is taken directly out of a customer’s bank account.