Mastercard loses its appeal to the UK supreme court

Darren Sinden

Rather embarrassing considering that Mastercard is one of the two merchant services providers which continue to make matters difficult for most perfectly reputable FX firms, citing chargeback risk and potential disputes as a possible issue before such issues even make themselves apparent.

One of the worlds largest credit card and payment services providers has suffered potentially damaging loses in the UK supreme court.

Mastercard was appealing against an action bought by former UK financial Ombudsmen Walter Merricks who had alleged that some 46 million UK shoppers had been overcharged for goods and services over a 16 year period, thanks to excessive transaction and merchant fees levied by Mastercard.

Mastercard’s appeal was dismissed by the UK’s highest court, which upheld a similar decision by the court of appeal made last year. The case dates back to a 2007 European commission ruling that Mastercard’s fees were anti-competitive.

The Supreme court ruling does not find against Mastercard but does mean that a class action lawsuit can now proceed. That collective lawsuit could generate as much as £14 billion in restitution which potentially could be distributed to every man and woman in the UK, who could receive £300.00, whether they ever used a Mastercard card or not.

Walter Merricks used the 2015 consumer rights act to pursue Mastercard after it failed to implement a European Commission ruling against it.

Mr Merrick had been with the Financial Ombudsman’s service for 10 years since its formation in 1999, during which he committed that part of his career toward championing changes in the law and procedures in criminal and civil litigation. During his time at the ombudsman, he oversaw more than 5 million investigations and resolved more than 750,000 disputes worth many millions of pounds.

In its 2007 ruling, the European Commission ruled that both Visa and Mastercard had imposed unlawful fees on transactions which were passed on consumers, via higher prices for goods and services. Visa accepted the ruling and settled several actions including a £1.20 billion claim by the UK’s largest grocery retailer, Tesco, in 2016.

Merricks arrived at the £14.0 billion figure for the class action suit by calculating the value of commerce in the UK over the 16 year period between 1992 and 2008 and then worked the difference in prices paid as a result of the Mastercard charges.

It’s not clear whether Mastercard will seek to defend the action in court or look to a deal outside of litigation. If it did choose to go to court despite the rulings against them, it’s thought Mastercard could drag the action out for many years and at 73 years old Mr Merrick is no spring chicken.

However, he isn’t acting alone, Innsworth Litigation Funding has joined the action and will receive a portion of any unclaimed funds should there be a nationwide distribution of any winnings from Mastercard.

Speaking about the case Mr Merricks was quoted as saying that “If Mastercard do come up with a sensible settlement, I will certainly consider it. I want consumers to be properly compensated. I don’t want this case to go on longer than it needs to.”

Mastercard on the other and has remained tight-lipped on the matter. Rather embarrassing considering that Mastercard is one of the two merchant services providers which continue to make matters difficult for most perfectly reputable FX firms, citing chargeback risk and potential disputes as a possible issue before such issues even make themselves apparent.

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