In July, The Times reported on the controversy surrounding a proposed settlement between merchants, on one side, and Visa, MasterCard and many of their issuing banks on the other. Now a majority of the named merchant plaintiffs in the suit have announced opposition to the settlement.
In the class-action lawsuit, 19 companies and trade associations, as well as lawyers acting on behalf of all American merchants, accused the credit card networks of colluding with their issuing banks to eliminate competition and increase the price of their transactions. The settlement would provide merchants taking MasterCard and Visa cards since 2004 with cash payments; a temporary rate reduction on credit card transaction fees; and rule changes that would, in theory, allow merchants to negotiate fees on transactions or levy a surcharge when customers use cards.
But almost immediately, some retail advocates complained that the deal did little to remed y the card companies' most egregious practices and even barred future lawsuits from other merchants against these same practices. The settlement's rules, they said, would make it practically impossible for merchants to apply a surcharge to customer transactions even if they wanted to, and few would want to.
“I don't think surcharging is something most restaurant owners will want to do in the first place - you want to have the most seamless, simple and positive interaction with the consumer as possible,†Scott DeFife, executive vice president of the National Restaurant Association, a trade group that is a party to the suit, said in July.
At the time, Mr. DeFife could say little more about the settlement because his organization had not made a decision about whether to support it. But in September, the group came out against it.
“The current payments system is so convoluted,†said Dawn Sweeney, the association's president and chief executive. “The a verage restaurateur has no idea exactly what they are paying and why they are paying large amounts to accept credit and debit cards, which are necessary in today's marketplace. The proposed settlement does not address those issues. And after digging into the details of the proposed agreement, we have serious concerns that rather than correct those fundamental flaws, it cements those flaws for decades to come.â€
On Friday, four grocery chains that are party to the suit announced that they, too, would fight the proposal, putting 10 of the 19 named plaintiffs at odds with the lawyers who negotiated the deal. Besides the National Restaurant Association, the plaintiffs now opposed to the settlement are: Affiliated Foods Midwest; Coborn's; D'Agostino Supermarkets; Jetro Holdings, and Jetro Cash and Carry Enterprises; the Association for Convenience and Fuel Retailing (N.A.C.S.); Natso, the truck stop operators association; the National Community Pharmacists Association; the National Cooperative Grocers Association; and the National Grocers Association.
The National Retail Federation, which is not a plaintiff in the suit, has announced that it will intervene in the case, as will the Retail Industry Leaders Association, which represents major chain stores. The National Association of College Stores and the American Booksellers Association also oppose the agreement.
“The people asking the court to approve the proposed settlement simply do not represent the interests of most merchants. We do,†Henry Armour, president and chief executive of N.A.C.S., the convenience store group, said in a statement. “The proposal represents a minority view and must be rejected.†N.A.C.S. was the first plaintiff to object to the settlement.
Lawyers for both sides have until Friday to file the proposed settlement for preliminary approval. The lead plaintiffs' lawyers have not returned calls seeking comment.
