Antitrust Litigation & Investigations

Visa, Mastercard Antitrust Class Actions Certified in New York and DC

Network fees harm competition and consumers, plaintiffs allege.

Two class action certifications in two months have put credit card giants Visa and Mastercard on the defensive over the alleged anticompetitive transaction fees and rules the companies impose on merchants in one case and independent ATM operators in the other.


Most recently, U.S. District Judge Margo K. Brodie of New York certified a class action against Visa, Mastercard and a group of large banks on Sept. 27 for fixing the “merchant discount,” the fee paid by merchants on credit and debit card transactions, and for rules that prevent merchants from steering customers to other, lower-fee payment options (In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, MDL No. 1720 [MKB] [JO]). The court has already preliminarily approved a proposed settlement of a maximum of $6.24 billion and a minimum of $5.54 billion.


In Payment Card Interchange Fee, a group of merchants sued the card companies and their largest member banks for conspiring to set the merchant discount and imposing rules that limit merchants from steering customers to other methods of payment, so-called no-surcharge rules, no-discounting rules, and honor-all-cards rules. These rules insulate the card networks from competitive pressure to lower the interchange fees that merchants pay whenever a consumer uses a credit or debit card to make a purchase. The case was brought on behalf of merchants that accepted Visa or Mastercard credit or debit cards between January 1, 2004, and January 25, 2019.


Named plaintiffs in the case are Photos Etc. Corporation DBA ScanMyPhotos.Com; Traditions, Ltd.; Capital Audio Electronics, Inc.; CHS Inc.; Discount Optics, Inc.; Leon’s Transmission Service, Inc.; Parkway Corporation; and Payless Inc.


In addition to Visa and Mastercard, defendants include Bank of America, Barclays, Capital One, JPMorgan Chase, Citicorp, Fifth Third Bancorp, First National Bank of Omaha, HSBC, PNC, National City, SunTrust, Texas Independent Bancshares, and Wells Fargo.


Independent ATM Operators


The month before Judge Brodie's ruling in federal court in Brooklyn, U.S. District Judge Richard J. Leon of the District of Columbia certified classes of plaintiffs who sued the card networks for price-fixing that restrains how ATM operators charge customers for cash withdrawals and inflate the network fees for ATM transactions. Such conduct is a restraint of trade prohibited by Section 1 of the Sherman Act, plaintiffs maintain (National ATM Council, Inc. et al., v. Visa Inc., et al., No. 1:11-cv-01803-RJL, D. DC).


MoginRubin LLP brought the case on behalf of independent ATM operators, non-bank affiliated ATM operators and the National ATM Council. The class of non-bank, independent ATM operators deploy about 60% of the ATMs in service in the U.S. The class is defined as all non-bank ATM operators that originated an authorized surcharged ATM cash disbursement at a qualified ATM at any time between Oct. 1, 2007, and the present.


MoginRubin's Jonathan Rubin, co-lead counsel in this decade-old litigation, said the rules adopted by Visa and Mastercard member banks "have stifled competition between ATM networks for years, inflating prices for ATM Operators and consumers alike." Rubin said the ruling to certify the class is a "significant step toward loosening the grip of Visa and Mastercard on the market for ATM network services." The case will benefit all independent ATM operators and millions of cardholders who depend on independent ATMs, he added. Joining Rubin in representing the plaintiffs are his colleagues Dan Mogin (co-lead counsel), Jennifer M. Oliver, and Joy Sidhwa. The Court issued its ruling certifying the class on Aug. 4.


Edited by Tom Hagy for MoginRubin LLP

Subscribe to the MoginRubin blog

Sign up to start receiving our blog posts straight to your inbox.

Thank You!

Check your inbox for details about your MoginRubin Blog subscription.