MasterCard Sued For $18.6B For Excessive Fees

MasterCard (NYSE:MA) is facing a lawsuit in Britain seeking $18.6 billion in restitution for charging excessive fees on millions of transactions over a 16-year period. The suit was filed by law firm Quinn Emanuel on Thursday at the Competition Appeal Tribunal on behalf of Walter Merricks. Roughly 46 million British users of MasterCard credit and debit cards could be eligible for a payout if the lawsuit is a success.

According to the details of the lawsuit, MasterCard is accused of charging stores unlawfully high fees on transactions between 1992 and 2008. MasterCard charges shops and businesses “interchange fees” when people buy products from them using its cards. Those fees were passed on to consumers in the form of inflated prices for goods and services. Card providers use these fees to fund cashback card deals, Air Miles and other perks to attract customers.

In a statement on Quinn Emanuel’s website, Merricks wrote: “MasterCard charged billions of pounds of unlawfully high fees for its sole benefit and to the detriment of consumers. There is no basis upon which MasterCard can contend that its card fees were not unlawful.” The filing covered more than 600 pages of documents.

The European Union’s highest court ruled in 2014 that the fees violated EU antitrust rules. A new Interchange Fee Regulation was adopted by the European Parliament and the Council of the European Union in April of last year. Fee caps of 0.2 percent for debit cards and 0.3 percent for credit cards came into effect in December.

Under the new Consumer Rights Act passed in Britain, all U.K. consumers who paid the charges and currently live in Britain will automatically become part of the group of claimants unless they explicitly opt out. Any person living in Britain who used a credit card, cash or cheques and was over 16 years old in the period covered by the lawsuit will be automatically added as a claimant. Consumers no longer living in Britain, but who lived in the country between 1992 and 2008, can opt in to the collective claim.

The claim is the biggest in British legal history. The tribunal will rule on whether the case can proceed late this year. If the case proceeds, it is expected to go to court in 2018.

In a statement, MasterCard said that “we continue to firmly disagree with the basis of this claim and we intend to oppose it vigorously.” MasterCard could also choose to settle the case out of court to head off the lawsuit. MasterCard is currently the world’s second largest credit and debit card issuer.

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