Court allows merchants to proceed with EMV case against card networks

District Court Judge William H. Alsup has denied the credit card networks' motions to dismiss B & R Supermarket, Inc., et al. v. Visa, Inc., et al,  and ordered that merchants may move ahead with their antitrust, conspiracy and other claims against MasterCard, Visa, American Express and Discover.

The lawsuit was filed in March by two Florida retailers on behalf of U.S. merchants, and claims that card networks and large banks conspired to shift liability for billions of dollars in card fraud away from themselves and onto retailers. Merchants continue to pay for fraud protection through interchange fees but no longer receive that protection, according to the complaint.

The suit also contends that chip cards in the U.S. are less secure than those used in other parts of the world because they use chip-and-signature technology, rather than chip-and-PIN.

"The amended complaint sufficiently alleges a context that raises a plausible and reasonable suggestion of collusion," Judge Alsup wrote in a 22-page opinion. "Plaintiffs have sufficiently pled the basic evidentiary facts as to involvement in Visa, MasterCard, and American Express in the alleged conspiracy." 

The order also concludes that the suit properly alleges Discover's involvement in the scheme. The banks have been dismissed from the lawsuit for now, however they could be brought back into the case if newly discovered evidence indicates complicity in the conspiracy, the release said.

Judge Alsup's order allows the plaintiffs to pursue discovery, including depositions of credit card network company officials. 

"[W]e can now move into the phase of this case where the evidence of the card networks' wrongdoing can be revealed," said Patrick J. Coughlin of Robbins Geller Rudman & Dowd, lead counsel for the plaintiffs, in the press release. "In the end, our hope is to secure some relief for the millions of merchants — many of them small businesses — who have suffered and continue to suffer enormous losses from this conspiracy."

Topics: Card Brands, EMV, Regulatory Issues, Trends / Statistics

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