U.S. merchants who processed Visa and Mastercard payments during a 15-year period have been given an extension until August 30 to file claims for their share of a landmark $5.5 billion class-action settlement.
The 90-day extension from the original May 31 deadline was requested by counsel for the class of merchants and granted by a federal judge in the Eastern District of New York in mid-May.
One reason the lawyers cited for seeking the extension was that there have been tens of thousands of instances where multiple parties have filed claims for the same business and more time was needed to resolve such conflicts.
The attorneys also wanted to provide a chance for additional businesses to file claims and secure the monetary relief to which they are entitled under the court-approved settlement.
The settlement 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 so-called swipe fees are what a merchant pays to accept credit card or debit card payments from consumers. Visa and Mastercard didn’t admit to any wrongdoing in the case, which only pertained to civil matters.
The class of merchants includes any U.S. businesses that accepted Visa and/or Mastercard credit or debit cards between Jan. 1, 2004 and Jan. 25, 2019.
The amount of money eligible businesses may receive from the settlement could range up to hundreds of thousands of dollars, according to a press release about the filing extension.
Class-action claim forms were sent to about 18.6 million merchants starting late last year. An official with the settlement administrator told the court in a May 14 declaration that the company had recently “sent out approximately 12 million reminder postcards over the span of two weeks to class members who had not yet registered or filed claims.”
“We really hope that merchants take advantage of the extra time that they have,” said Ryan Marth, a Robins Kaplan partner who is one of the co-lead counsel for the class of merchants. “This is real money for real businesses.”
Marth said he could not provide a figure regarding the number of claims filed until after the claims period ends, the claims submitted have been validated and the data is submitted to the court.
Thousands of conflicting claims
A claim conflict occurs when more than one party attempts to file a claim on behalf of a class member in a settlement.
As of May 10, there were more than 30,000 claim conflicts pending resolution in the $5.5 billion payment card case, according to a document class counsel submitted seeking an extension of the claims filing deadline. The document, dated May 14, was a declaration from an official with Epiq Systems, the official settlement administrator in the case.
The thousands of conflicting claims were between “third-party filers, class members, and claim buyers,” class counsel told the court.
Third-party filers are groups that typically offer to file a claim for merchants in exchange for a percentage of their recovery.
The most common reason conflicts are created is because more than one third-party filer attempts to act on behalf of a single class member “pursuant to a claimed contract,” said the declaration from Loree Kovach, a senior vice president for Epiq’s class action & claims solutions unit.
“While Epiq anticipated this scenario and has processes in place to address it, the volume of conflicts is not only unprecedented, but the instances where more than just two parties are attempting [to] act on behalf of a single Class Member are significant,” Kovach wrote in her declaration.
“Ten percent of conflicts involve more than two parties, and some conflicts involve as many as six parties,” Kovach continued.
Marth declined to provide an updated figure concerning the number of claim conflicts that need to be addressed.
Merchant reacts positively to extension
Amid the work to resolve claim conflicts, class counsel and Epiq are encouraging eligible businesses that have yet to file claims to do so by the extended deadline.
Sam Turner, co-owner of The Nicollet Diner, which is based in Minneapolis, said he filed a claim in the case several months ago.
The extension of the original deadline to file claims could give more businesses like his the chance to ensure they don’t leave money on the table, he said in an interview.
“The deadline came up as we transitioned into summer, which is a very busy time, especially for a lot of restaurant owners, so it’s something that may have fallen by the wayside for a lot of them,” Turner said. “I think that anything that they can do to get more folks included that were impacted by this is a good thing.”
CCSalesPro CEO James Shepherd, a payments consultant, called the extension of the claims filing deadline “fantastic.”
He said having as many merchants as possible file claims could help convey to Visa and Mastercard that business owners take the issue of excessive interchange fees seriously.
“Getting a lot of small business owners to file for this sends a really strong message,” Shepherd said in an interview. “The message that we send back to Visa and Mastercard is, ‘don't overcharge us.’”
Merchants navigate complementary settlements
Meanwhile, in March, it was announced that Visa and Mastercard had reached a related, but separate settlement that would cover how interchange fees would be handled in the coming years.
A federal judge recently denied preliminary approval of that settlement amid concerns that it did not treat large and small merchants “equitably.”
However, the judge’s actions do not impact the claims filing process for the court-approved $5.5 billion settlement, according to Marth.
“The settlements relate to different cases, on behalf of different classes, brought by different lawyers so there are no implications for either the already approved $5.5B settlement, nor the continued effort to give as many eligible merchants as possible the opportunity to claim their share,” Marth said in a written statement.
