Mastercard sued for $19
billion in Britain's biggest damages claim
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[September 09, 2016]
By Andrew MacAskill
LONDON (Reuters) - Some 46 million
people in Britain could potentially benefit from a legal case
brought against Mastercard <MA.N> demanding 14 billion pounds ($19
billion) in damages for allegedly charging excessive fees, according
to court documents filed in London.
The case brought by a former chief financial services ombudsman
alleges the payments company charged unlawfully high fees to stores
when shoppers swiped their debit or credit cards and these were
passed on to consumers in higher prices.
Mastercard is alleged to have done this for 16 years between 1992
and 2008, in more than 600 pages of documents filed at the
Competition Appeal Tribunal on Thursday."This was almost an
invisible tax," Walter Merricks, who is bringing the case, told the
BBC. "Mastercard has behaved disgracefully in this. They have not
had the reasonableness to accept that what this was doing was
damaging UK consumers."
Mastercard said in a statement it denied any wrongdoing."We continue
to firmly disagree with the basis of this claim and we intend to
oppose it vigorously," the world's second-largest payments network
The lawsuit comes after the European Union's antitrust regulator
found in 2014 Mastercard's fees to store owners to process
international payments within the EU were excessive.Law firm Quinn
Emanuel said the lawsuit was the largest damages claim in British
history and would be brought under a law meaning consumers would
automatically be claimants unless they opt out.
Any person living in Britain who used a credit card, cash or
cheques and was over 16 years old in the period covered by the
lawsuit will automatically be part of the claim.If the 14 billion
pound claim was shared equally between the number of eligible
claimants, each person could receive more than 300 pounds each,
according to a Reuters' calculation.A lawyer working on the case
said Mastercard charged shops fees in excess of 1 percent for card
use on international transactions between 1992 and 2008.Although the
EU's anti-trust regulator only ruled Mastercard's international fees
were illegal, this impacted British consumers as it was the default
fee used in Britain.
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Shoppers carry bags in London, Britain August 25, 2016. REUTERS/Neil
Two years ago, the European Union capped the fees retailers pay at 0.2 percent
for debit cards and 0.3 percent for credit cards. Merricks in a statement said
the case is a watershed moment for consumer compensation in Britain.Merricks was
head of Britain's financial services ombudsmen for ten years until 2009, helping
to settle disputes between consumers and financial services companies. Britain's
banks have been caught in a range of misspelling cases in the last five years.
They have paid 24 billion pounds in compensation for misspelling loan payment
insurance, making it Britain's costliest scandal in financial services.Consumers
no longer living in Britain, but who lived in the country between 1992 and 2008,
can opt in to the collective claim against Mastercard.Any hearing on the case is
not expected until early 2018, unless MasterCard settle it out of court.
($1 = 0.7523 pounds)
(Editing by Mark Potter and Alexander Smith)
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