A US federal court has approved the merchants’ request to go ahead with their antitrust, conspiracy and other claims against credit card networks comprising MasterCard, Visa, American Express and Discover.
A California federal judge William Alsup agreed with two Florida businesses including B & R Supermarket and Grove Liquors, which filed the case in March. The case is pending in the Northern District of California.
The lawsuit claims that the card networks and large banks conspired to shift liability for billions of dollars in card fraud away from themselves and onto retailers.
Merchants continue to pay for fraud protection in the form of interchange fees but no longer receive that protection, the complaint alleged in the lawsuit.
The lawsuit focuses on the changeover from magnetic-stripe payment cards to newer cards containing a computer chip, known as EMV cards.
When the conversion happened, the applicants challenged that card networks conspired to make merchants bear the costs of certain chargebacks that had for years been the responsibility of the financial companies.
The case, further, claims that after liability shift, merchants became accountable for certain fraudulent charges; however, merchants continued to pay for fraud protection through interchange fees but no longer received that protection.
The suit also claims that chip cards in the US are less secure than those implemented in other parts of the globe as they use chip-and-signature technology, rather than chip-and-PIN.
“The amended complaint sufficiently alleges a context that raises a plausible and reasonable suggestion of collusion," the judge wrote in a 22-page opinion.
“Plaintiffs have sufficiently pled the basic evidentiary facts as to involvement in Visa, MasterCard, and American Express in the alleged conspiracy.”
The order also concludes that the suit properly alleges Discover's participation in the scheme.