Visa Inc., MasterCard Inc. and several leading Canadian banks that issue their cards face being included in proposed national class-action litigation tied to a lawsuit filed March 28 in the Supreme Court of British Columbia. The suit alleges the card networks and their major issuers conspired to fix prices on fees merchants ultimately pay to accept cards.
Filed on behalf of Mary Watson, a Vancouver-based furniture storeowner, the suit follows a filing by the Competition Bureau of Canada, which seeks to prevent Visa and MasterCard from imposing rules preventing surcharging and forcing merchants to honor all of their branded credit cards.
The proposed class action seeks to recover billions in fees merchants paid in interchange as part of the discount rate they paid their acquiring banks over several years to accept cards, according to a press release from Branch MacMaster LLP and Camp Fiorante Matthews, two Vancouver-based law firms bringing the lawsuit.
“The central allegation is that issuing banks in the Visa and MasterCard networks imposed structured merchant fees without any negotiation and without any competition amongst themselves,” Reidar Mogerman, a partner with Camp Fiorante Matthews, tells PaymentsSource. “The suit also seeks compensation for certain other rules and regulations imposed on merchants that stifle competition.”
Canadian merchants paid $5 billion in 2009 in fees to accept cards, according to the press release.
Along with Visa and MasterCard, the suit names Bank of America Corp., Capital One Financial Corp, Citigroup Inc., BMO Financial Group, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank as defendants.
Typically it takes more than a year to certify a class “in a case of this magnitude,” Mogerman says.
Representatives for MasterCard in Canada were not immediately available for comment. In a statement, Visa said it “is in the process of reviewing the complaint. We cannot yet address the specifics of this suit. Visa Canada denies the plaintiff`s allegations and will be vigorously defending this action.”
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