Big card brands, big banks hit with more antitrust suits

Visa Inc. and MasterCard Worldwide were recently hit by two new class action complaints alleging the companies fix ATM fees. These complaints came less than a week after the National ATM Council Inc. and more than a dozen independent ATM operators filed an antitrust lawsuit on the same grounds. All three suits were filed in the U.S. District Court for the District of Columbia.

The Bartron complaint

Lynne Bartron and Charles Brown et al. v. Visa Inc. et al. was filed Oct. 18, 2011, by Washington D.C. attorney John Kern on behalf all U.S. customers who have paid ATM fees on or after Oct. 1, 2007. Kern's firm was joined in bringing the suit by Hagens Berman Sobol Shapiro LLP and The Paynter Law Firm PLLC.

The plaintiffs in this case refer to themselves as "indirect purchasers" and ask the court to certify 50 indirect purchaser subclasses – one for each U.S. state. Otherwise this complaint resembles the one filed in The National ATM Council Inc. et al., v. Visa Inc., et al. on Oct. 12. Both complaints allege the card companies' ATM fees suppress competition and illegally prohibit discounts for transactions that don't use the Visa or MasterCard networks.

"The violation in this case is a horizontal agreement among every bank that issues Visa- or MasterCard-branded payment cards – including every principal U.S. bank – organized and supervised by the defendants as ringleaders and enforcers for the purpose of fixing the surcharge that consumers pay for ATM services," the Bartron complaint states.

The complaint also asserts, "While couched in terms of a ceiling on ATM access fees, the ATM restraints actually operate to prohibit discounting by competing ATM operators. The 'ceiling' price is the 'floor' price due to the ATM restraints."

The plaintiffs believe other ATM networks should be able to introduce lower-cost PIN-based transactions or offer rebates but are prohibited from doing so by the card companies. "The ATM restraints put a competitive straightjacket on ATM operators and injure plaintiffs," the complaint alleges.

The Bartron lawsuit asks the court to:

• Certify the complaint as a class action
• Declare the imposition of ATM fees to be a restraint of trade in violation of the Sherman Antitrust Act
• Issue an injunction requiring the card companies to eliminate the ATM restraints
• Forbid the card companies from fixing or specifying access fees for ATM transactions
• Issue an order against the card companies prohibiting or preventing cardholders from choosing to use an alternate network
• Make the card companies "fund programs to inform consumers and ATM operators of their right to choose network routing"
• Award treble damages for each member of the class

The Genese complaint

The second new complaint, Justin Genese v. Visa Inc. et al., alleges the two card companies illegally conspired with three major banks – and the companies processing merchant transactions for those banks – to fix prices for "foreign" ATM access fees.

A foreign ATM transaction occurs when a customer of one bank withdraws money from his or her account using an ATM owned or operated by another bank. In a foreign transaction, the customer pays the ATM operator for use of the ATM, and the operator pays its bank a foreign ATM fee. The Genese lawsuit was filed Oct. 18, 2011, by Craig Brikin of Mehri & Skalet PLLC and Labaton Sucharow LLP. The action names Bank of America N.A., BA Merchant Services LLC, JPMorgan Chase & Co., Chase Paymentech Solutions LLC, and Wells Fargo & Co. as defendants in addition to Visa and MasterCard.

The complaint alleges the banks joined in a conspiracy with the card companies to fix ATM access fees. It asks for:

• Certification as a class action
• A finding that the defendants are in violation of the Sherman Antitrust Act
• An injunction requiring the card companies and the banks to eliminate the ATM restraints
• An injunction prohibiting the defendants from fixing ATM access fees for ATM services
• Treble damages and costs

Defendant responses

MasterCard spokesman Seth Eisen responded to a request for comment saying, "The claims challenging certain MasterCard ATM rules are without merit. These rules were put in place to protect consumers from ATM operators seeking to impose discriminatory surcharges on our cardholders. We believe these important consumer protections must be preserved and we will vigorously defend against the claims brought against us."

Regarding this suit, Lisa Westermann, Wells Fargo Assistant Vice President Public Relations, said, "We believe the allegations of the complaint are without merit and plan to vigorously defend the case."

A spokesman from BofA declined to comment. Neither Visa nor JPMorgan Chase responded to a request for comment.

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