Group of Big U.S. Retailers Breaks Off From Visa and MasterCard Settlement

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A group of large U.S. retailers including companies like Target Corp and Macy’s Inc. broke off from a proposed $7.2 billion settlement reached last year and sued the credit card companies Visa Inc and MasterCard Inc on Thursday. The lawsuit was filed just before the deadline for the proposed settlement was reached on May 28, by which date the millions of retailers and merchants affected by credit card processing fees need to decide whether to accept the settlement or file their own legal actions.

The original lawsuit in which the settlement had been proposed was filed on behalf of merchants accusing Visa and MasterCard of making billions by inflating swipe fees.

When the settlement proposal was first announced in July 2012 in the federal court in Brooklyn, it had come under heavy criticism from many retailers. Critics said that the proposed settlement required them to sign off overbroad litigation releases in exchange of inadequate compensation. Critics also argued that the terms of the proposed settlement could shield Visa and MasterCard from future actions over antitrust violations.

  

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Retailers who opted out of the proposed settlement are free to file their own lawsuits over the same and related causes of action seeking damages. If the settlement concludes then parties to the original lawsuit would still be bound by other injunctive relive.

Visa and MasterCard that they are confident the settlement would win final approval of the court. Preliminary approval of the settlement was received in November 2012.

Other plaintiffs who opted out of the settlement and filed the new lawsuit at the U.S. District Court in Manhattan include JC Penney, Kohl’s, TJX and others. Early last week, Wal-Mart Stores and 18 other big retailers had said they would be opting out and would file separate legal actions over damages.

Wal-Mart was not within the plaintiffs in the lawsuit filed on Thursday.