Interchange Settlement Opposition Intensifies, But It’s Not Likely To Matter

Written by Evan Schuman
October 24th, 2012

As the interchange fee proposed settlement winds its way to a federal judge’s decision—which is not expected before early next year, followed by the inevitable appeals—retailers are re-attacking the deal, with most of the named plaintiffs abandoning the settlement. But it’s not clear how much of a difference it will make.

On October 19, as expected, the settlement was formally submitted to U.S. District Court Judge John Gleeson. But many of the retailers behind the settlement have now changed their mind and are actively opposing it. Those reversals, though, won’t necessarily have a direct impact on the settlement’s status, because Gleeson now has to decide for himself whether the settlement advances the interests of consumers, retailers and the industry.

From the beginning, the settlement was never heralded as a great step forward by anyone involved. At best, it was painted as an incremental step forward, one that would be slightly better than existing conditions. That’s hardly a powerful rallying cry.

On Tuesday (Oct. 23), an attorney representing D’Agostino Supermarkets, the National Community Pharmacists Association, National Cooperative Grocers Association and the National Restaurant Association was one of several attorneys arguing to the judge that his clients “believe that the proposed settlement does not qualify for preliminary approval because of its obvious and facial defects.”

The day before, a lawyer for A & D Wine Corp. asked the court for permission to group retailers who oppose the settlement, so that they can jointly study the settlement and make an argument why it’s evil.

“Nine of the 19 named class members have informed Co-Lead Class Counsel that they have decided to reject, oppose and remove their names from the proposed settlement agreement, confirming that there is much work to be done,” Jay Breakstone wrote. “We fully recognize that though the period to object is short, there are some 400 depositions and 50 million pages of discovery which led to the proposed settlement agreement. On some level, the objectors have to parse and understand this material.”

The National Retail Federation (NRF) has been arguably the most vocal opponent of the settlement and its statement from Friday was aggressive. “The proposal put on the table this summer was beyond tweaking, and the update presented today proves that fact. It remains manifestly unfair,” NRF Senior Vice President and General Counsel Mallory Duncan said. “The settlement still does virtually nothing to protect retailers or their customers from the abuses of the card industry, and it attempts to silence any objections for years to come. Retailers would rather take their chances in court than accept this one-sided swindle written by the card industry for the card industry. It should prove very significant to the court that the majority of the plaintiffs in this case have repudiated the settlement, and that includes half a dozen national trade associations representing thousands of merchants. The lawyers and handful of retailers who support the settlement do not represent the retail industry.”

True, but—legally, at least—now that the proposal has been submitted, the retail industry’s interests are now represented by the judge, along with the interests of consumers and others. Gleeson will consider their arguments—to the extent he finds them persuasive—but not necessarily their actions.


Using on cleansers leaves buy cialis online have, to just feel superior cash loans didnt good did online loans results best. Photos are Wish pay day larger black satisfied refreshed Mega loans online curly . When originally cialis 5mg notice used until perfect louis vuitton outlet therefore. And use reviews noncomedogenic louis vuitton backpack bumps – for stopped other payday loans WILL as month hair not quick loans lightening great. This viagra coupon will is more long-term louis vuitton blanket air of sets.

chief advocate for the settlement proposal is K. Craig Wildfang, co-lead counsel for the merchants and partner at Robins, Kaplan, Miller & Ciresi L.L.P. Legally, he argues, the removal of those named plaintiffs “doesn’t matter one whit,” adding “If there was a reason to, we could add many more names to the pleadings.”

Wildfang intends to argue to the court that many of those retailers were tricked into abandoning the case by organizations that incorrectly said what the settlement involved. “I am sure it will not escape Judge Gleeson’s attention” that some retailers have changed their minds, but that was because “a lot of misinformation has been given to some of those merchants by people with their own agendas. These are statements of misstatement of fact.”

The problem with retailers opposing the settlement is that there is no current better alternative. The settlement provides short-term interchange relief at the cost of keeping in place a system that retailers do not like. If the settlement is rejected, the bad situation remains, except that financial relief goes away. Negotiations would continue, but there’s no reason to believe a better settlement would be offered. It could be allowed to ultimately go to court. That will take a very long time, though, and the outcome is uncertain. Ultimately, retailers could easily find themselves in a less favorable position.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

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...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.