Visa and Mastercard’s agreement to settle a class-action lawsuit for $197.5 million marks a significant development in the legal landscape surrounding ATM fees and swipe fees, which have long been contentious issues for consumers and businesses alike. The lawsuit alleged that Visa and Mastercard engaged in anticompetitive behavior to keep ATM fees artificially high, impacting individuals who withdrew cash from bank-operated ATMs in the United States from October 1, 2007, onward.
The preliminary settlement, which awaits court approval, is estimated to encompass approximately 175 million members of the settlement class. If finalized, the settlement will entail the distribution of over 100 million notices via email, along with targeted advertisements across various digital platforms, ensuring affected individuals are informed of their rights and the terms of the settlement.
This resolution follows a legal battle that escalated when Visa and Mastercard appealed a lower court’s decision to certify the plaintiffs as a class-action group. However, the appeal was denied, paving the way for the case to proceed. The companies argued that the court had not conducted a rigorous analysis before certifying the class action, but the decision stood, allowing the lawsuit to move forward.
Under the terms of the proposed settlement, Visa will contribute $105.7 million, while Mastercard will pay $92.8 million. Additionally, two related lawsuits are pending in the same court, one involving customers who used non-bank ATMs and another concerning businesses that own independent ATMs, indicating the broader implications of the legal proceedings in the financial industry.
This settlement is part of a broader legal landscape where Visa and Mastercard have faced scrutiny over their business practices. In a separate antitrust suit, the companies agreed to cap credit interchange fees until 2030 and negotiate these fees with merchant-buying groups, addressing concerns about excessive fees charged to merchants for credit and debit card transactions.
Moreover, a previous financial settlement of $5.54 billion was reached with 18 million businesses that accepted Visa or Mastercard over a 15-year period, providing eligible merchants with compensation for alleged overcharges. The deadline for claims in this settlement was extended to August 30, 2024, to ensure affected parties have adequate time to participate in the claims process.
Overall, the settlement of the class-action lawsuit represents a step toward addressing consumer and merchant grievances regarding ATM and swipe fees, signaling a potential shift in the financial industry’s practices and accountability to stakeholders.