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Walmart: Settlement ‘Worse Than Losing’

May 29th, 2013

And those card-brand policies, bad habits and ethical lapses would apply to any “merchant” that accepts Visa or MasterCard—not just the 8 million conventional retailers that were accepting the cards when the lawsuit was filed eight years ago, but also the roughly 26 million (and counting) small businesses and individuals using Square and similar card-swipe devices. For all of them, it comes to the same thing: Whatever Visa and MasterCard say, goes.

How did things come to this? Remember, this lawsuit wasn’t about PCI, transaction security or breach penalties. It was about interchange and card-acceptance rules. It wasn’t expanded to cover such a wide range of Visa and MasterCard rules until all the fact-finding was over. Somehow, once settlement talks began, it morphed into a huge giveaway for the card brands.

That, of course, is part of the objection from Walmart and the dozens of other retailers that signed this 74-page objection. The filing argues that the expansion to cover all those other card-brand rules was illegal and that most of the “relief” retailers are supposed to get consists of rights merchants already had or “rights” they can’t actually exercise. It also argues that the class is improperly formed, that notice was faulty, that the remaining non-objecting named class plaintiffs have conflicts of interest and that the settlement actually doesn’t address the original issues in the case. (Remember those interchange and card-acceptance rules? Post-settlement, they’ll be exactly the same.)

Officially, Tuesday’s deadline was the last chance to object to the settlement until the “fairness” hearing on September 12. That actually may not hold true, because card processor First Data (which is also a “merchant” under another expansive settlement definition) has asked for a hearing about its own objection. In theory, the shouting was supposed to be over by now. In practice, this is looking like a very long, hot summer.

And for the record, here are the other retailers and trade groups (plus one railroad) that joined Walmart in the objection: original plaintiffs Coborn’s, D’Agostino’s, Jetro, Affiliated Foods Midwest Cooperative, National Association of Convenience Stores, National Community Pharmacists Association, National Cooperative Grocers Association, National Grocers Association, National Restaurant Association and NATSO, along with 7-Eleven, Academy Sports + Outdoors, Aldo and Call It Spring, Alon Brands, Amtrak,, American Eagle Outfitters, Barnes & Noble, Best Buy, BJ’s, Carter’s, Costco, Crate & Barrel, Darden Restaurants, David’s Bridal, Dick’s Sporting Goods, Dillard’s, Family Dollar, Drury Hotels, Foot Locker, Gap, GNC, Genesco, Gymboree, HMSHost, IKEA, J. Crew, Kwik Trip, Lowe’s, Marathon Petroleum, Martin’s Super Markets, Michaels Stores, Nike, Panda Restaurant Group, Panera Bread, P.C. Richard & Son, Petco, PetSmart, RaceTrac Petroleum, REI, Retail Industry Leaders Association, Roundy’s, Sears, Speedway, Starbucks, Stein Mart, Thermo Fisher Scientific, Wendy’s, Wet Seal, Whole Foods and


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Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

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