Around 40 million shoppers could be eligible for £450 each, if a landmark ‘class action’ against MasterCard is successful.
MasterCard is facing a multi-billion pound damages claim that could reach £19 billion for imposing allegedly illegal card charges that were passed on to shoppers between 1992 and 2008. So could you be one of the 40 million people in line for a refund?
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What’s going on then?
Over a 16-year period, it is alleged that MasterCard charged retailers excessive fees when shoppers used their credit and debit cards. You might not realise this, but when you pay by card in a shop, the retailer is required to pay your credit or debit card company a fee for each transaction.
These fees are called ‘interchange’ fees and according to experts, retailers can whack them into the price of the goods, driving up the prices we pay. It’s allegation that we’ve all been paying higher prices due to these fees that is the basis for this case.
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Who started all of this?
Former financial services ombudsman Walter Merricks has brought the claim in what is called a 'class action'. In the past, he has overseen complaints and investigations regarding some of the largest mis-selling cases by financial institutions and has helped consumers receive billions of pounds in compensation.
We spoke to Walter and he told us, "The prices of everything we all bought from 1992 and 2008 were higher than they should have been, as a result of the unlawful conduct of MasterCard."
He also says, "To be clear, there is no question that MasterCard acted illegally in the way it conducted its business, a business that affects all of us. Although most of us did not know this, experts who study the retail economy knew it was happening - and so did MasterCard. My aim is to get the redress to which UK consumers are entitled and to ensure that MasterCard cannot hold on to the illegal profits made."
Walter Merricks
If the claim is successful, will I be eligible for compensation?
If you were working and living in the UK between 1992 and 2007, you will probably be automatically represented in the case, unless you opt out.
Should I do anything now?
No. Walter Merricks is planning to file a claim in the autumn. A timetable will then be set to take the claim through to a trial around mid-2018, unless MasterCard makes a settlement offer before that. If the claim is successful, you’re looking at 2-3 years before any compensation is paid.
But keep your eye out - if the case is successful, you’ll have to make a claim within a set time period. According to Walter Merricks: "It will be a simple process for consumers to get compensation without using claim management companies."
MasterCard
What does MasterCard say?
Mark Barnett, President, United Kingdom and Ireland for MasterCard says,“Currently, no lawsuit has yet been filed against us, but we firmly disagree with the arguments levelled against us.
"MasterCard offers value by powering the way people pay – in store and online. We’re constantly innovating to keep payments safe and secure, while making the experience as convenient as possible. Think how contactless has made life easier by reducing queues and offering faster payments on public transport.
"Any type of payment has a cost. In our system, those costs are shared by banks, retailers and MasterCard - as together with consumers, we all benefit from the payment.
"Cash is no solution for online shopping and isn’t free either. Shops must pay people to count, secure and transport cash. This is often overlooked or simply accepted as a cost of doing business."
This article was first published on Wednesday July 20th, 2016
