American multinational financial services corporation Mastercard is now facing the UK’s first big consumer class action after the Competition Appeal Tribunal granted a $14 billion-plus claim against the global payments processor.
The UK Supreme Court dismissed Mastercard’s objections in December, the decision to allow former financial ombudsman Mr. Walter Merricks’ five-year case to proceed as a collective action was made. It also establishes a precedent for a slew of other proposed class actions that have been put on hold as a result of it.
Mr. Merricks said that “Mastercard has thrown everything at trying to prevent this claim going forward, but today its efforts have failed, the tribunal’s ruling heralds the start of an era of consumer-focused class actions which will help to hold big business to account in areas that matter.”
Mr. Merricks claims that Mastercard imposed excessive interchange fees the, fees retailers pay credit card firms when customers use their cards to shop between May 1992 and June 2008 and that those fees were passed on to customers when retailers hiked prices.
However, his attempt to broaden the scope of the case by including the deceased’s estates and compound interest in the claim failed. This, according to Mastercard, reduced the size of the claim to about 13.68 billion, at odds with the claimants who value it at $20.52 billion.
Mastercard added that “The decision today reduces the value of this spurious claim by more than 35 percent, We are confident that over the coming months a review of key facts will further significantly reduce its size and viability.”