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London Court Approves $253 Million Settlement in Landmark Mastercard Swipe Fees Class Action

February 22, 2025
Smart Money

London Court Approves Settlement in Mastercard Class Action Lawsuit

A London court has officially approved a settlement in a significant class action lawsuit brought against Mastercard regarding its swipe fees. The Competition Appeal Tribunal’s decision marks a pivotal step in a case that has garnered attention for its allegations of anticompetitive practices and excessive charges imposed on consumers.

Settlement Details

The approved settlement amounts to £200 million (approximately $253 million). This is a stark contrast to the original estimate of £10 billion (nearly $12.6 billion) associated with the lawsuit. The judge overseeing the case stated that the settlement “is being approved subject to finalization” of the remaining details, with a formal order expected to follow shortly.

Background of the Lawsuit

The lawsuit stems from actions initiated in 2016 by Walter Merricks, a former financial ombudsman and consumer advocate. Merricks alleged that Mastercard’s interchange fees—which are charges levied on retailers whenever consumers use a credit card—were exorbitant, affecting around 60 million British residents over a span of 16 years. He argued that these fees were unjustly high and ultimately inflated retail prices for consumers across the country.

At a December 3 hearing, Merricks and Mastercard reached an agreement in principle to settle the lawsuit. Following the announcement, Merricks expressed satisfaction with the outcome, noting, “I am very pleased that after nearly nine years of litigation with Mastercard, I have agreed to a settlement that I believe will deliver meaningful compensation to class members who choose to come forward to participate in the distribution of the damages.”

In parallel, a spokesperson for Mastercard indicated the company’s relief at having reached an agreement, stating, “We are pleased to have reached an agreement in principle to put this case behind us.”

Controversy Surrounding the Settlement

Despite the approval, the proposed settlement has not gone without challenge. The litigation funder, Innsworth Advisors, raised concerns, arguing that the settlement undervalued the claim significantly. Innsworth has invested over £45 million (around $57 million) in funding the legal proceedings and contended that the settlement amount was inadequate considering this investment.

As part of the settlement terms, Innsworth will receive its legal costs along with an additional £55 million (approximately $70 million) from the payout, which it deems insufficient given the resources allocated to the case. This scrutiny raises important questions about the future of class action funding in the United Kingdom, as stakeholders debate the fairness and implications of such settlements.

Conclusion

With this ruling by the Competition Appeal Tribunal, a critical chapter in the long-standing litigation against Mastercard appears to be coming to an end. However, the concerns voiced by Innsworth Advisors suggest that the discussions around class action lawsuits and their funding mechanisms remain a contentious issue. As further details regarding the settlement are finalized, the implications for consumers and the legal landscape could continue to unfold in the coming months.