Today, National Cooperative Grocers Association (NCGA) announces it will reject the recently proposed $7.25 billion class action settlement with Visa Inc., MasterCard Inc., and several major banks. The settlement was offered in response to antitrust litigation alleging unfair practices by credit card and debit card issuers, including charging billions in noncompetitive "swipe" or "interchange" fees to retailers across the country.NCGA is named as one of the plaintiffs in the lawsuit.
"When NCGA signed onto this action, we did so in the interest of consumer fairness and in support of industry transparency," said Robynn Shrader, chief executive officer of NCGA. "This settlement falls short of providing true reform in the system by continuing to allow credit card issuers and credit card networks to exploit retailers and consumers without risk of repercussion."
For years, retailers have been forced to pay non-competitive fees, which average about 2 percent of the price of a purchase. Over the last seven years, credit card issuers have charged retailers $350 billion in fees. The proposed settlement includes a $6.05 billion payment for alleged past damages as well as a temporary reduction in swipe fees for 8 months that is valued at 1.2 billion.
The proposed settlement would allow for individual retailers to charge fees directly to consumers who wish to use credit cards or debit cards, a scenario NCGArejects as a way to pass the burden to retailers of collecting non-competitive fees from consumers. The practice of surcharging is an inadequate solution to the broader problem of swipe fees. The settlement also does not limit credit card issuers and credit card networks from hiking related fees in the future, and if accepted, would protect credit issuers from future lawsuits.
NCGA urges other retailers to reject the proposed settlement and push for a revised settlement that holds credit card issuers accountable, ensures competition in the market and encourages innovation in payment systems.