MasterCard is facing a £19bn ($24.5bn) class action lawsuit in the UK for charging exorbitant processing fees on cross-border card transactions that were passed on to shoppers.
Led by the UK’s former chief financial services Ombudsman Walter Merricks, the collective claim is set to become the first one to be filed under the Consumer Rights Act 2015. The act, introduced recently, paves the way for consumer groups in the UK to seek collective compensation on behalf of all individuals affected in the case.
The lawsuit accuses MasterCard for setting illegal high interchange fees that were charged to stores when shoppers swipe their debit or credit cards and ultimately were passed on to consumers in the form of inflated prices for goods and services.
According to the case, MasterCard charged the excessive processing fees for a period of 16 years, thus pocketed billions of pounds ill-gotten profits collected from Britons.
Merricks, who has hired the law firm Quinn Emanuel, claimed that the total damage caused to British consumers could be at the extent of £19bn.
Merricks said: "There is no question that MasterCard acted illegally in the way it conducted its business, a business that affects all of us.
"All of us overpaid to the tune of up to £19 billion during a period lasting 16 years."
Refuting the charges leveled against the company, MasterCard said: "MasterCard firmly disagrees with the basis of this legal claim. Electronic payments deliver real value to people online, in store and everywhere.
"MasterCard is committed to providing ever-more convenient, safe and secure payments to all our customers, including consumers, retailers, governments and banks."
In 2014, the European Court of Justice ruled that charing high fees amount to a violation of EU antitrust rules and rejected MasterCard’s argument that imposing a cap on the charges it imposed on retailers would shift the burden to the consumers.