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Mastercard battles return of $ 19 billion class motion lawsuit

© Reuters. FILE PHOTO: This image shows Mastercard Inc. credit cards

By Kirstin Ridley

LONDON (Reuters) – A specialized London court will be considering again this week to allow a class action lawsuit against Mastercard (NYSE 🙂 for $ 19 billion ($ 19 billion), which UK adults will each if successful could qualify about 300 pounds.

Former Financial Ombudsman Walter Merricks, who claims Mastercard has overwhelmed more than 46 million people in the UK in nearly 16 years, hopes the Competition Appeal Tribunal (CAT) will uphold the case after the UK Supreme Court raised objections to the trial December has canceled.

A two-day trial will begin Thursday and determine the fate of Britain's first mass consumer claim – and set the rules for a number of other class action lawsuits that have stalled as a result.

Merricks, advised by US-based law firm Quinn Emanuel, claims Mastercard charged excessive "exchange fees" – the fees retailers pay to credit card companies when consumers use a card to shop – between May 1992 and June 2008 Fees collected were passed on to consumers as retailers raised prices.

Mastercard said it should not make the claim that people have gained valuable benefits from payment technology and that the lawsuit is being led by U.S. attorneys and backed by organizations focused on making money for themselves.

"We fundamentally disagree with this claim …", it said.

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Legal arguments this week are likely to center in part on whether or not deceased's estates should be eligible and whether or not there should be compound interest "significant" to the ultimate size of the claim, Mastercard says.

The case was filed in 2016, one year after the CAT was nominated to oversee the UK's US "opt-out" classification regime for breaches of UK or EU competition law – and 12 years after the European Commission decided that Mastercard charged with unlawful cross-border exchange fees during the reporting period.

In such cases, members of a defined group based in the UK are automatically required to take legal action unless they unsubscribe.

However, the CAT blocked the lawsuit in 2017 because it deemed it unsuitable for collective litigation, sparking lengthy appeals, and creating a bottleneck for other class actions.

If the case continues, Merricks will likely have to prove that Mastercard's domestic charges were illegal – and quantify the costs passed on to consumers.

Litigation financier Innsworth Capital has raised £ 60.1m to cover the legal costs of the case, including £ 15m to cover Mastercard’s legal costs if the claim fails. It will be paid for damages that have not been claimed with the approval of the CAT.

As a rule, the utilization by applicants in such applications is low. The U.S. Federal Trade Commission found in 2019 that only about 9% filed a claim after successful class action lawsuits against consumers.

($ 1 = 0.7189 pounds)

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