Retailers Opt Out of Multibillion-Dollar Settlement

Retailers that sued Visa and MasterCard over interchange fees reject $7.25 billion proposed settlement and file new suit in New York federal court.

A handful of major retailers, including Target Corp., J.C. Penney Co. Inc., Kohl’s Corp., TJX Cos. Inc. and Macy’s Inc., sued Visa and MasterCard Thursday, pulling out of a $7.25 billion pending settlement agreement from a previous lawsuit over fees to process credit card transactions.

The recent lawsuit, which was filed in the U.S. District Court in New York, would prevent the retailers from cashing in on the proposed settlement from a prior case it waged against Visa and MasterCard.

“Target is objecting to and opting out of the interchange class action settlement and, in conjunction with numerous other major retailers, pursuing a separate lawsuit against Visa and MasterCard,” a spokeswoman from Target told WWD. “Target believes the proposed interchange fee settlement is bad for both retailers and consumers. 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 to allow Visa and MasterCard to continue charging illegal fees.”

In the original case, filed in a Brooklyn federal court in 2005, plaintiffs, including the aforementioned retailers and Saks Inc., QVC Inc., Dillard’s Inc. and Limited Brands Inc., as well as various booksellers and supermarket chains, accused Visa and MasterCard of inflating what is known as interchange, or swipe, fees.

The retailers that filed the complaint on Thursday are asking the court for compensatory, triple damages and other remedies.