Another Merchant Lawsuit Settlement Is Reached, This One on EMV-Related Chargebacks

A lawsuit filed in March 2016 over how the four U.S. card brands handled the liability shift during the EMV migration more than 10 years ago, along with unreimbursed chargebacks associated with it, has reached its next step.

The suit is over unreimbursed liability-shift chargebacks made with a credit or debit card on the networks in the Oct. 1, 2015 through Sept. 30, 2017 time period. The court says it has not decided whether the defendants violated any laws.

The U.S. District Court for the Eastern District of New York announced Monday a $231.7 million settlement was reached Oct. 17 in the class action lawsuit B & R Supermarket, Inc., et al. v. Visa, Inc. et al., Case No. 1:17-cv-02738-BMC-JAM (E.D.N.Y.). The suit alleged that American Express Co., Discover Financial Services, Mastercard Inc., and Visa Inc. violated antitrust laws by acting in concert to shift the liability for what it said are “certain fraudulent charges” to merchants when a card was enabled with EMV technology and the merchant’s point-of-sale terminal was not enabled for it.

The plaintiffs claim they did this by agreeing to adopt the same policy via nearly identical rules for shifting the liability from banks to merchants and by making the liability shift effective in the same month and in the same manner across all four networks, says a Web site on the litigation. The EMV liability shift went into effect in October 2015 in an effort to reduce card fraud at the point of sale.

In the 2016 complaint, two plaintiffs, Milam’s Market, a Florida grocer, and Grove Liquors, a Florida alcoholic beverage retailer, said they had a combined 220 chargebacks from Oct. 1, 2015, to June 30, 2016, and 212 were because of the liability shift and would not have been their responsibility except for the  shift, they alleged.

The litigation site says separate agreements have been reached with American Express for $20 million, Discover for $12.2 million, and $119.7 million for Visa’s share and $79.8 million for Mastercard. Merchants have until Jan. 26 to object to the settlements. Merchants that wanted to be excluded had until August 2022 to do so.

The next court date is on April 27 for a hearing to consider any objections and whether to approve the settlements. The notification period for the settlements will end Dec. 16.