£14bn class action claim against Mastercard dismissed

24 July 2017

A £14 billion damages claim filed against Mastercard has been rejected by the Competition Appeal Tribunal.

Walter Merricks, a former chief ombudsman of the Financial Ombudsman Service, filed a claim against the credit card provider in September 2016.  

He argued that Mastercard owed UK consumers a collective £14 billion for charging “unlawfully high” ‘interchange fees’ between 1992 and 2007.

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 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 was for the Competition Appeal Tribunal to allow the action to proceed. But it has dismissed the case, stating that the claim isn’t eligible for inclusion in “collective [class action] proceedings”.   

Mr Merricks says he’s now “actively considering the possibility of an appeal”. He comments: “The granting of the collective proceedings order in this case would have allowed 46 million consumers to recover the losses caused to them by Mastercard’s proven illegal conduct.

“It is, however, unfortunate that the Tribunal considered that it was not satisfied that my experts would be able to get the evidence to show that the illegal fees charged by Mastercard to businesses were then passed on to consumers in the form of higher prices. It is also disappointing that the Tribunal determined that even if I could identify accurately the loss suffered by all 46 million consumers, the fact that I could not precisely calculate the individualised loss for each of those 46 million consumers, means consumers should get nothing at all.

“I believe these are matters my advisers could have addressed and overcome had the claim been allowed to proceed.”

A spokesperson for Mastercard says: “We welcome the Competition Appeal Tribunal’s judgment refusing certification for the proposed collective action. As set out in Mastercard’s arguments to date, we believe that the claims were completely unsuitable to be brought under the collective actions regime. The Tribunal sided with this position.” 

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