MasterCard Inc is being sued for £14 billion (US$18.6 billion) on behalf of British consumers for allegedly charging excessive fees on millions of transactions over a 16-year period.
The suit, which is the latest in a string of legal cases around the world over card companies’ fees, could bring a payout to 46 million British MasterCard users, the law firm filing says.
The firm, Quinn Emanuel, says the claim is the largest in British legal history.
The suit alleges that MasterCard charged stores unlawfully high fees on credit and debit card transactions between 1992 and 2008, which were passed on to consumers in the form of inflated prices for goods and services.
“The filing of this claim is the first step towards consumers obtaining compensation for what MasterCard did,” said Walter Merricks, a former UK financial services ombudsman who filed the suit through Quinn Emanuel on Thursday at the Competition Appeal Tribunal.
Merricks called it “a watershed moment for consumer redress in this country.”
MasterCard and its larger competitor Visa Inc have been embroiled in legal battles with merchants over their fees for decades. A US$6 billion class-action lawsuit in the US, which involves merchants suing Visa and MasterCard, is being appealed in US courts.
There is also a legal battle between Visa and retail giant Wal-Mart, which involves what are known as “chip and sign” transactions.
Merchants have long argued that the fees that Visa, MasterCard and to a lesser degree American Express and Discover, charge to process transactions are too high.
Because Visa and MasterCard have a near duopoly on credit card transaction processing in most of the world, merchants say the fees represent anti-competitive behavior.
The British lawsuit follows a 2014 ruling by the EU’s highest court backing the EU’s move to scrap some fees that MasterCard allows banks to charge to merchants.
MasterCard said in a statement that “we continue to firmly disagree with the basis of this claim and we intend to oppose it vigorously.”
The tribunal will rule late this year whether the case can proceed, the law firm said.
If so, it is expected to go to court in 2018.
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