MasterCard faces £14bn claim for overcharging swipe fees in UK
MasterCard has been sued for £14bn ($18.72bn), the biggest legal claim in British history.
MasterCard has been sued for £14bn ($18.72bn), the biggest legal claim in British history, for imposing illegal card charges that were ultimately borne by 46 million UK consumers.
The claim was filed under the Consumer Rights Act 2015 on behalf of all UK consumers at the Competition Appeal Tribunal (CAT) in London. The act, introduced recently, paves the way for consumer groups in the UK to seek collective compensation on behalf of all individuals affected in the case.
Led by the UK’s former chief financial services Ombudsman Walter Merricks, the collective claim has become the first one to be filed under the Consumer Rights Act 2015.
The case accuses MasterCard for fixing illegal high interchange fees that were charged to stores when shoppers swipe their debit or credit cards and ultimately were passed on to consumers in the form of inflated prices for goods and services.
According to the lawsuit, MasterCard charged the excessive processing fees for a period of 16 years between 1992 and 2008, thus pocketed billions of pounds ill-gotten profits collected from Britons.
The case stems from the decision by the European Court of Justice in 2014, which said that MasterCard violated the EU antitrust rules by charging high interchange fees on businesses that accept MasterCard debit and credit cards.
Further, the lawsuit states that the cardholder’s bank charged an interchange fee to the retailer’s bank on every occasion when a consumer made a card payment.
The EU said that the fee system was anticompetitive and unnaturally inflated prices for consumers. By allowing banks charge higher fees, MasterCard gave them an incentive to issue their cards instead of their rival’s cards.
Merricks said: “MasterCard charged billion of pounds of unlawfully high fees for its sole benefit and to the detriment of consumers. It has already been found to have broken competition law, the basis of which was to protect consumers, and that cannot be disputed. There is no basis upon which MasterCard can contend that its card fees were not unlawful.”