Scott+Scott Amsterdam Files Collective Action on Behalf of MIFC Foundation Against Visa and Mastercard Over Excessive Interchange Fees
AMSTERDAM, The Netherlands — After extensive research, the collective interest group stichting MIFC (MIFC Foundation) has decided to initiate legal proceedings against credit card companies Visa and Mastercard. Both Visa and Mastercard charged excessive transaction costs – interchange fees – to Dutch entrepreneurs who accepted interregional transactions since at least 1992. As a result, they paid too much for years.
- Visa and Mastercard kept interchange fees artificially high
- Dutch entrepreneurs paid excessive interregional interchange fees since 1992
- MIFC Foundation claims back overcharged interchange fees through collective actions
- Possible damages could run into the millions
Reason
MIFC Foundation is committed to supporting Dutch entrepreneurs who have paid too much in transaction costs since 1992. The Foundation wants to recover the overcharged amounts through two so-called collective actions against the individual companies.
The Foundation focuses specifically on transactions with cards issued outside the EEA region, the European Economic Area; for example, payments to an Amsterdam hotel or restaurant by an American tourist. For every payment with a non-European payment card, an entrepreneur pays a fee, the so-called interchange fee. Visa and Mastercard can determine the amount of this fee themselves, with the knowledge of the banks that issue their cards. Research has now shown that Visa and Mastercard have kept the interchange fees at an artificially high level since 1992 at least, and charged up to 2 percent of each transaction amount as a fee.
“MIFC Foundation believes that no interregional interchange fee should be charged at all. We are therefore asking the court to prohibit Visa and Mastercard from using the interregional interchange fee,” says Ellen Soerjatin, member of the board of the MIFC Foundation and spokesperson for the board regarding the Interchange Overcharge actions.
She continues: “Apart from that, it is clear that the percentages that Visa and Mastercard charged were much higher than the percentage they used after the European Commission raised its objections to the high fees in 2015 and 2017. In response, Visa and Mastercard significantly reduced the interregional interchange fees in 2019. This means that Dutch retailers, catering companies and other entrepreneurs who have accepted interregional transactions with Visa and Mastercard credit cards since 1992 have paid too much.”
Collective actions
MIFC Foundation claims that Visa and Mastercard for years have kept the interchange fees artificially high. This limited competition, and as a result companies structurally paid too much. “And in doing so, Visa and Mastercard have violated both European and Dutch competition law,” Soerjatin explains. “We now want to enforce compensation for these entrepreneurs through two collective actions and at the same time send a signal to other large parties to act more transparently and fairly.”
MIFC Foundation has tried to reach a solution with Visa and Mastercard, but has now deliberately opted for collective action, because in this way all claims from entrepreneurs can be bundled into one lawsuit. This is cheaper and more efficient than entrepreneurs having to go to court individually.
Compensation for entrepreneurs
MIFC Foundation calls on entrepreneurs who have accepted interregional transactions since 1992 to register via the website set up for this purpose. In this way, they can claim compensation.
The amount of the final compensation depends on the number of transactions and the interchange fees paid. Larger companies with more transactions may receive a higher compensation, but the calculation of the compensation amount is based on the same legal basis for everyone. It is ultimately up to the judge to determine how much compensation each entrepreneur is entitled to.
The collective actions are expected to start on 8 July. “Economists estimate the total damage at a sum of at least 1 billion euros,” Soerjatin explains about the possible impact of the lawsuits. “So these are really very serious amounts and violations. That is why we are doing our utmost to reach victims via social media, the regular media and via industry organizations, in order to send an even stronger signal.”
Parties involved
Multilateral Interchange Fees Claims Foundation
Multilateral Interchange Fees Claims (abbreviated: MIFC Foundation) is an independent non-profit foundation. MIFC takes action against companies that abuse their dominant position, form cartels, or otherwise act unlawfully against entrepreneurs or other victims. MIFC does this by, among other things, exposing unlawful conduct, holding consultations with companies and other interest groups and, if necessary, taking legal action.
The MIFC Foundation is a collective interest group, whose activities include the following:
- The foundation investigates the conduct of Visa and Mastercard. For example, lawyers have been engaged to legally assess the conduct of Visa and Mastercard. Economists have been engaged to calculate the damages.
- The foundation takes collective legal action against Visa and Mastercard
- The foundation maintains a website. This website serves, among other things, to inform the public about Interchange Overcharge and to answer their questions.
- Conducting a public campaign to expose Mastercard’s unlawful conduct and to encourage entrepreneurs to register.
- Sending letters to Visa and Mastercard with the aim of reaching a solution by mutual agreement.
- Conducting consultations with various industry organizations and entrepreneurs in order to be able to represent their interests.
Scott+Scott
Scott+Scott is an international law firm with an office in Amsterdam. Scott+Scott has significant experience in complex case resolution representing victims of anticompetitive conduct and other forms of wrongdoing including shareholder violations in the EU, the UK, and the United States. Scott+Scott attorneys have successfully settled or litigated cases based on clients’ needs. The firm represents corporations, institutional investors, businesses, and individuals worldwide with offices in New York and seven other U.S. states as well as in London, Amsterdam, Berlin. For more information about our firm, including successful case resolutions, please visit www.scott-scott.com.
Interchange Overcharge
Interchange Overcharge is the name that Multilateral Interchange Fees Claims Foundation (abbreviated: MIFC Foundation) uses for the actions against Visa and Mastercard.