The National Association of Convenience Stores (NACS) was the first to reject a proposed settlement in a case against Visa and Mastercard over credit card interchange fees. As time wears on, however, it looks like they won't be the last.
Most recently, the association has been joined by retail giant Target in their opposition to the proposed settlement, for ostensibly the same reasons cited by NACS in their original complaint. "Target believes the proposed interchange fee settlement is bad for both retailers and consumers," said the company in a statement. "The proposed settlement would perpetuate a broken system, restrict retailers from any future legal action and offer no long-term relief for retailers or consumers. In addition, Target has no interest in surcharging guests who use credit and debit cards in order to allow Visa and Mastercard to continue charging unfair fees. We will continue to explore our options while working toward a solution that represents true reform."
NACS has held that the settlement, which has the support of the defendants as well as the court-appointed class counsel for the plaintiffs, fails to address the lack of transparency in the process by which Visa and Mastercard set these fees. "Not only does the proposed settlement fail to introduce competition and transparency into a clearly broken market, it actually provides Visa and Mastercard with the tools to continue to shield swipe fees from market forces," said NACS Chairman Tom Robinson upon announcing NACS' rejection of the settlement earlier this month.
As a result of their opposition, and the fact that they currently stand alone among the 19 class action plaintiffs in rejecting the proposed settlement, the lawyers representing the plaintiffs have petitioned the court to have NACS dropped as their client, arguing that they can't reconcile the interests of their other clients with NACS' "divergent objectives." NACS has until tomorrow to respond to the motion.
Responding to the news that Target also opposed the settlement, NACS said that they expected many other class action plaintiffs to follow Target's lead in the coming weeks. "It's a bad deal and the growing backlash against the terms of the proposed settlement that we are hearing from retailers confirms that this is far from a done deal," said NACS Senior Vice President of Government Relations Lyle Beckwith.
NACS also cautioned retailers to tread carefully in the coming weeks, as Beckwith suggested that they may receive unsolicited sales calls offering them a piece of the more than $6 billion in settlement funds in exchange for their support of the proposed agreement. "It wouldn't surprise me at all if retailers start getting calls," he noted. "We strongly recommend that retailers keep their options open before signing any agreements with third parties to obtain settlement funds."
Stay tuned to NACM's blog and eNews for further updates.
- Jacob Barron, CICP, NACM staff writer