Wal-Mart lawsuit targets Visa fees

Retailer claims ‘enormous’ harm

Wal-Mart Stores Inc. filed a lawsuit Tuesday against credit-card provider Visa in U.S. District Court for the Western Division of Arkansas in Fort Smith.

In the long-anticipated lawsuit, Wal-Mart alleges that Visa “engaged in a conspiracy with some of the nation’s largest banks” to fix fees charged during transactions. Not only did Visa violate antitrust laws by setting the fees, the lawsuit reads, the credit-card company and banks created rules preventing “Wal-Mart and other merchants from protecting themselves against those fees.”

Visa caused Wal-Mart “enormous damages” between Jan. 1, 2004, and Nov. 27, 2012, according to the lawsuit. Retailers and consumers nationwide paid approximately $350 billion in fraudulent fees, Wal-Mart’s filing said. Wal-Mart also is suing for money lost as a result of what it calls inadequate fraud technology on cards.

“Walmart and all other merchants were subjected to rules and practices that harmed competition, suppressed fraud preventing technology in the U.S., and inflated interchange fees charged to merchants when customers used their credit and debit cards,” Wal-Mart spokesman Randy Hargrove said in a statement. “As a result, many merchants were forced to pass on some of these artificially high fees to consumers.” Visa increased interchange fees by 234 percent between 1998 and 2006, according to the lawsuit. Interchange fees are charged to retailers when a customer uses a debit card or credit card. High transaction fees are then passed on to consumers when retailers set their prices. Eliminating Visa’s monopoly on the credit- and debit-card market would have reduced billions of dollars in fees paid by Wal-Mart and its customers, the lawsuit alleges. Customers, including those who paid cash for purchases, were affected by the higher fees, according to the suit.

Wal-Mart is seeking a jury trial and asking for damages, plus interest, attorney fees and costs associated with the lawsuit. Visa filed a lawsuit against Wal-Mart in June, attempting to stop the retailer from “endless, wasteful litigation between parties.”

More than 7,000 retailers, including Wal-Mart, pulled out of a settlement with Visa and MasterCard that would have paid more than $7 billion, according to a previous report. Wal-Mart continues to oppose the settlement, Hargrove said.

An attempt to reach Visa was not immediately successful.

Business, Pages 25 on 03/26/2014

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