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Mastercard Faces Multi-Billion-Pound Class Action Lawsuit in the U.K.

Categories : Cash is efficient, Costs of cash versus costs of electronic payment instruments
March 18, 2022
Tags : Costs of payments, Mastercard, Payments competition, Regulators
The Competition Appeal Tribunal has added £2.7 billion to the £14 billion class action against Mastercard. If successful, 46 million claimants could receive around £300 each.
Guillaume Lepecq

Chair, CashEssentials

This post is also available in: Spanish

About the Claim

The claim goes back to December 19, 2007, when the European Commission ruled that Mastercard had imposed unlawful fees on transactions processed through its network. These illegal fees were paid by merchants that accepted Mastercard cards. The Commission also stated that consumers are likely to have paid higher prices for goods and services because the businesses raised retail prices due to Mastercard’s unlawful fees. Mastercard lost its appeal against this decision in 2014.

According to the claim, it does not matter what form of payment clients used; consumers paid higher prices and lost out due to Mastercard’s unlawful conduct. The proposed suit seeks to include purchases made by individuals from businesses selling within the U.K. between May 22, 1992, and June 21, 2008.

Walter Merricks is the class representative for the claim. He is a qualified lawyer and the former Chief Ombudsman of the Financial Ombudsman Service, a position he held for ten years, defending consumer interests and holding large financial firms to account for their conduct.

The Timeline

On September 6, 2016, Merricks filed the claim as a class action made possible by the Consumer Rights Act 2015. It seeks compensation of approximately £14 billion, on behalf of 46 million persons.

The Competition Appeal Tribunal (CAT) dismissed the application in July 2017. The Court of Appeal reversed that decision. In December 2020, the Supreme Court rejected Mastercard’s appeal, paving the way for the lawsuit to go ahead in Britain’s largest class-action suit.

“It is nearly 12 years since Mastercard was clearly told that they had broken the law by imposing excessive card transaction charges, damaging consumers over a prolonged period,” says Merricks. “When challenged, all they have done is to raise technical legal arguments that turn out to have no merit – as the court of appeal has shown today. It’s now time for Mastercard to admit the damage they did, to apologise to the British public, and to agree to pay the compensation they owe.”

In March 2022, the CAT ruled that Walter Merricks can represent class members who were alive on September 6, 2016, and have died since and allowed him to plead a higher interest rate of 5% above the prevailing Bank of England rate. This could add up to £2.7bn pounds to the £14bn claims on current estimates.

The next hearing is expected to occur in the CAT in July. The legal team will seek a timetable to trial by having Mastercard hand over disclosure documents, followed by a written witness and expert evidence.

U.K. Regulator Fined Mastercard over Prepaid Cards Cartel in January

In January 2022, Mastercard and four other companies were fined more than £33 million for breaching competition law for vulnerable people in the prepaid cards market. Mastercard’s fine was £31.5m. Prepaid Financial Services (PFS), Allpay, APS, and Sulion split the rest. According to the U.K. Payment Systems Regulator (PSR), the companies had agreed not to poach customers for the cards used to distribute welfare payments to vulnerable people such as the homeless and victims of domestic violence.


This post is also available in: Spanish