A £14 billion damages claim has been filed against MasterCard by the former chief ombudsman of the Financial Ombudsman Services.
Walter Merricks argues that the credit card provider owes UK consumers a collective £14 billion for charging “unlawfully high” ‘interchange fees’ between 1992 and 2007.
These so-called interchange fees are levied by credit card companies and paid by retailers when processing card transactions. However, retailers pass these fees on to consumers in the prices they charge for goods. So while you will never be asked to pay an interchange fee yourself when using a debit or credit card, you indirectly do so – even when paying by cash.
Mr Merricks says these fees were a “significant cost” for retailers that were then passed on to consumers through increased prices of goods and services. He adds that all UK consumers, including cash purchasers – and not just MasterCard holders – have lost money as a result. In 2007, the European Commission told MasterCard to reduce the level of its fees.
The next stage in the process is for the Competition Appeal Tribunal (CAT) to allow the action to proceed. Quinn Emanual, the law firm representing Mr Merricks, expects this hearing to go ahead in late 2016, after which a timetable will be set with a trial likely to happen about mid-2018.
Shoppers don’t need to do anything at this stage as the claim has been filed as a class action on behalf of all UK consumers. If Mr Merricks wins his case and damages are awarded, Quinn Emanual says consumers will be invited to make a claim for any compensation owed.
Mr Merricks adds: “The filing of this claim is the first step towards consumers obtaining compensation for what MasterCard did. I am confident that the CAT will authorise the claim to go forward, and I look forward to the opportunity to present our case. This is a watershed moment for consumer redress in this country.”
MasterCard, however, rejects the claims. In a statement, the company says: “Now that the claim has been filed, we will take time to review it in detail, however we continue to firmly disagree with the basis of this claim and we intend to oppose it vigorously.”