Mastercard (NYSE: MA) to Face a £14.0 Billion Class Action Suit in the UK

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Mastercard (NYSE: MA) to Face a £14.0 Billion Class Action Suit in the UK

 Mastercard (NYSE: MA) to Face a £14.0 Billion Class Action Suit in the UK

 

  • The British Supreme Court has allowed the initiation of a first-class action suit against payments company Mastercard for overcharging customers.
  • The company has been accused of overcharging of nearly 46 million people in Britain over a period of 15 years.
  • If the claims against the company are established, it could lead to a payout of up to £14 billion, which translates into £300 for every adult citizen in the UK.

The United Kingdom Supreme court has upheld the ruling of the Court of Appeal given last year, which allows the initiation of a first-class action suit against payments company Mastercard (NYSE: MA) for overcharging customers. This is the country’s first mass consumer claim.  If the claim against the company is established, it could lead to a payout up to £14 billion, which would translate into £300 for every adult citizen in the country.

Mastercard, though disagreeing fundamentally with the basis of the suit, has accused US law firm “Hit and Hope” for driving a campaign against it for selfish gains. As per the claims, as many as 46 million people in the UK have been charged excessive transaction fees by the company for a period of 15 years.

After the Supreme Court’s ruling, the case will now be sent back to the Competition Appeal Tribunal, which will re-examine the grant of a required Collective Proceedings Order for the case to go further for the trial.

The Class-Action suit

The class-action suit brought in against Mastercard worth £14 billion is one of the largest the country has seen in the last few years. The suit, which had originally been initiated by Walter Merricks, the first Chief Ombudsman of the Financial Ombudsman Service in the UK, has the support of several consumer advocacy groups.

This suit was initiated after the company lost a similar case in the EU, where it was ruled that the company’s fees were anti-competitive. Over the past few years, Mastercard has been accused in many countries over antitrust laws and has also faced regulatory action.

The EU Ruling

The current lawsuit against the company transpires from the anti-competitive practices that were being followed by the company over the past few years. In 2019, European Commission imposed a fine of €570.56 million on Mastercard for "obstructing merchants’ access to cross-border card payment services" by asking acquiring banks to apply the interchange fees of the country where a retailer was placed. This was a breach of EU antitrust rules.

Similar allegations have been levelled against the company in the UK. Should the allegations against the company stand in a court of law, it will be a major blow to the company’s international operations, which has seen a massive growth in recent months underpinned by the coronavirus pandemic.

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