Interchange Judge Orders Retailers To Change Anti-Settlement Websites

Written by Frank Hayes
April 17th, 2013

Retailers who oppose the proposed payment-card interchange settlement will have to change the information posted on their websites, a federal judge ordered last Thursday (April 11). The changes required include links to the official site that merchants are supposed to use for objecting to or opting out of the settlement—and a banner stating that the judge determined previous information on the sites to be misleading.

In a hearing in Brooklyn on Thursday afternoon, U.S. District Judge John Gleeson said that unhappy plaintiffs, including the National Association of Convenience Stores, the National Restaurant Association and the National Grocers Association, and their lawyers in the class-action suit have until today (April 18) to decide on a plan for fixing the information on the sites.

The class-action legal fight is supposed to be between the retailers and payment-card brands Visa (NYSE:V) and MasterCard (NYSE:MA). But since last summer, when lawyers for the class of 8 million merchants hammered out a settlement with the card brands and their banks, most of the actual fighting has been between the class lawyers and their clients, who believe the settlement doesn’t give them much in return for allowing Visa and MasterCard unrestricted ability to raise interchange rates in the future. The settlement also blocks any future interchange suits against the card brands.

The purpose of the websites at the center of last Thursday’s hearing was to convince merchants both to object and to opt out of the settlement, and the retail groups sponsoring the sites said they were not misleading. But Judge Gleeson disagreed. “I’m not going to belabor this with you,” Gleeson told a lawyer for the groups that created sites opposing the settlement. “I’m just talking about basic fairness.”

Gleeson ordered the groups behind the anti-settlement websites to add links to the officially authorized websites for the class action, and to make clear that merchants can object to the settlement separately from opting out of it.

More than half the named plaintiffs in the class-action suit have objected to terms of the settlement. Last week the Retail Industry Leaders Association, which represents Walmart (NYSE:WMT), Target (NYSE:TGT), Best Buy (NYSE:BBY) and other large chains, announced it will opt out of the settlement and encourage its members to do so as well.

One indication of how unsettled the settlement still is: Last week Gleeson also said he had appointed New York University School of Law professor Alan Sykes as an independent expert to “advise the court with respect to any economic issue that may arise” in connection with the settlement. The court will hold a fairness hearing in September, after which Gleeson will decide whether the settlement should get final approval.


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