MasterCard lawsuit could net you a £400 refund

Former ombudsman heads up collective claim on behalf of 40 million UK consumers

(Image credit: Thomas Niedermueller/Getty Images)

MasterCard is facing a massive lawsuit on behalf of 40 million UK consumers, with the prospect of paying damages of as much as £19bn.

It is one of the first collective claims to be brought under the Consumer Rights Act 2015, which allows for US-style class actions that automatically apply to all affected consumers unless they choose to opt out.

The lawsuit, being led by former chief financial services ombudsman Walter Merricks, relates to the so-called "intercharge" rates paid by retailers to customers' banks for allowing them to pay for goods using a credit or debit card.

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He argues that MasterCard's fees were proven to be excessive and anti-competitive in the years between 1992 and 2008 and that retailers passed on the cost to consumers. As the fees would have led to higher prices across the board, he adds, the damages would have been incurred by all shoppers, and not just those paying through MasterCard.

"The prices of everything we all bought from 1992 to 2008 were higher than they should have been," Merricks said, reports The Times. "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 it made."

Merricks alleges 40 million customers lost out to the tune of as much as £19bn, or up to £475 each, and says that as the charges were already ruled to be illegal by the European Court of Justice in 2014, all that remains is to prove consumers suffered losses.

An initial hearing will take place at the Competition Appeal Tribunal later this year, with any trial likely to follow in 2018. Affected consumers do not need to do anything and will automatically qualify for a refund if the case is successful.

A spokesman for the company said: "MasterCard firmly disagrees with the basis of this legal claim. Electronic payments deliver real value to people online, instore and everywhere."

During a seven-year legal battle with the European Commission that resulted in the 2014 ruling, Mastercard argued that clamping down on how charges could be applied across the single market would increase costs overall.

Last year, the European Commission introduced a new, lower cap on intercharge rates across the EU.

As it accepted the findings of the Commission back in 2008, MasterCard's main rival, Visa, is not included in the class action. At that time, both companies reduced their intercharge rates, but Mastercard went on to launch a series of legal challenges.

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