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Starting late last year, class-action claim forms were sent to about 18.6 million merchants across the U.S. who processed Visa and Mastercard payments during a 15-year period.
Now, lawyers for the merchants are wondering how many of them will seek compensation ahead of a fast-approaching deadline.
The claim forms were mailed in the aftermath of a $5.5 billion settlement that partially resolved a long-running antitrust case in which the two credit card network giants were alleged to have overcharged merchants by exacting excessive interchange fees.
Those swipe fees are what a merchant pays to accept credit card or debit card payments. Visa and Mastercard didn’t admit to any wrongdoing in the civil case as part of the settlement that was upheld by the Court of Appeals for the Second Circuit in March 2023.
To be eligible to receive money for the allegedly inflated interchange fees they paid, merchants have until May 31 to file a claim with the settlement administrator.
Given that deadline, plaintiffs’ lawyers and the settlement administrator are making a final push to get as many eligible businesses to submit claims as possible, said Alexandra “Xan” Bernay, one of the co-lead counsel for the class of merchants.
Their efforts have included educating merchants about the validity of the large settlement and working to counteract scams perpetrated by bad actors.
“We have seen some skepticism from merchants and heard from merchants who unfortunately had inadvertently recycled their mailed claim form,” Bernay said. “Fortunately, the education and outreach team have helped us reach merchant populations that may have originally been unlikely to file.”
A recent related, though separate, settlement involving Visa and Mastercard that addresses how interchange fees will be handled in the future has created a need for some additional education to prevent confusion among merchants.
Bernay advises merchants that this other settlement, which has not yet received court approval, does not impact their ability to file claims and receive money.
The case for filing
As for the court-approved payment card settlement, the work to get merchants to file claims began in earnest once the claim notices were mailed in December, said Bernay, a partner at the law firm Robbins Geller Rudman & Dowd.
The class includes any U.S. businesses that accepted Visa and/or Mastercard credit or debit cards between Jan. 1, 2004, and Jan. 25, 2019.
While the lawyers and settlement administrator declined to provide estimates of how much money individual merchants will receive, Bernay said many claimants could receive a significant amount, given the large number of transactions they processed during the lengthy class period.
She also emphasized that while some class-action settlements tend to benefit larger businesses much more than smaller ones, the payment card case has the potential to help “every type of business.”
“This settlement touches the smallest corner bodega all the way to some of the largest companies in the country,” Bernay said.
She and an official with the settlement administrator, Epiq, say the claims filing process was purposely designed to be very easy for merchants to complete.
Merchants can go to the official claims website and enter their claimant ID and control number located in the middle of the claim form they received, or they can input their taxpayer identification number and some additional information. Bernay said the filing of a claim should take just a few minutes.
“I think people are going to be pleased with what they get back relative to the level of effort it’s going to take to file a claim,” said Cameron Azari, a senior vice president at Epiq. “It’s leaving money on the table for folks if they don’t.”
Merchant perspective
One business that has gone through the claims submissions process for the payment card case is Pigment, a regional retailer in San Diego that sells design-savvy gifts, flora and furniture.
Filing a claim was “super seamless and easy to do,” said Chad Anglin, Pigment’s co-owner. He estimated the process took him three minutes.
Anglin said it was “wonderful” that businesses like his are eligible to receive money for the allegedly excessive interchange fees they paid.
While Anglin declined to say how much cash compensation he expects Pigment to get from the settlement, he said the funds would help the business weather uncertain economic times in the future and any seasonal lulls.
“It’s always nice to have a little bit of a cushion in case you have slower months, so we’ll just probably put it in savings and use it if need be,” Anglin said.
Outreach efforts
Bernay’s team and others have needed to confront some skepticism among merchants that the payment card settlement is legitimate and will provide real monetary relief, she said.
As a result, the plaintiffs’ lawyers have worked with Epiq Systems and the (W)right On Communications public relations agency on an education and outreach program.
These educational efforts have included a focus on reaching underserved populations. Bernay said there has been “good progress” made in that regard.
She has highlighted in discussions with business owners and former owners that they are still eligible to file claims if their businesses have declared bankruptcy, closed or been sold to a new owner in the years since the class period for the case.
Additionally, the outreach participants have partnered with a variety of trade associations to help them raise awareness about the settlement and get key questions addressed.
The groups the team has partnered with include FMI – The Food Industry Association, the National Restaurant Association, the National Retail Federation and the American Beverage Licensees.
The settlement outreach team has hosted webinars for FMI members and the lawyers have fielded questions that have come up about the claims process.
For example, some members had concerns about claims forms going directly to stores rather than their corporate headquarters because they worried they might be missed and not received by the appropriate person, said Jennifer Hatcher, FMI’s chief public policy officer and senior vice president, membership. This could result in the claim forms not being included in the consolidated aggregate of a member’s forms, she said.
“It’s helpful to be able to have that direct contact with the class counsel to be able to navigate this,” Hatcher said.
Fighting scams
Meanwhile, one challenge the outreach team has faced is that some businesses and individuals have tried to mislead merchants about the steps required to claim money from the settlement.
One group falsely told merchants they were required by the court to sign up with it, Bernay said, and another had someone purporting to be the celebrity Snoop Dogg leave a voicemail directing people to a scam website about the settlement.
“We were not able to track down the actual perpetrators by name,” Bernay said of the two examples described above. “Despite that, the court in the case issued orders for them to cease and desist,” she added.
The lawyers have repeatedly had to seek court intervention to halt scams perpetrated by some third-party filers, which are groups that typically offer to file a claim for merchants in exchange for a percentage of their recovery.
Third-party filers are allowed to operate if they are not misleading class members, and they can help drive up the percentage of claims filed, Bernay said.
Before using a third-party filer, Bernay recommends merchants examine what credit card processing data the settlement administrator has. She said if the data appears largely correct, merchants should consider whether a third-party filer is “going to get me X percent more that will justify giving up X percent of my recovery.”
“For many merchants, it is not going to make sense to give up significant percentages of the recovery to which they’re entitled,” Bernay said.
Assisting merchants
One third-party filer helping merchants with the payment card settlement is called Collectively, a software platform led by Manor Ventures CEO Louis Teplis. Collectively provides an online platform for merchants to match, file and collect from many settlements.
Teplis said his company helps its clients gather additional data, which can be shared with the settlement administrator to maximize recovery.
Collectively will receive a percentage of the recovery merchants get in exchange for the services it provides, and Teplis said the company helps merchants who otherwise may not take the time to file a claim.
“We like to say that doing nothing is not an option because it just doesn’t make sense to leave money on the table,” he said.
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