Mastercard is close to paying out up to £14 billion in total to more than 46 million adults in the UK after losing a landmark High Court case.
This morning the US card provider lost a legal battle with former financial ombudsman Walter Merricks, who claimed consumers paid higher prices between 1992 and 2007 because of higher fees for card transactions that were later declared illegal.
His case, the first to be brought before Britain’s highest court, was originally dismissed by a court but revived by the Court of Appeal last year, and the High Court has now ruled in his favor after a two-day hearing. In the middle of May.
The verdict is out: Mastercard has lost its High Court battle with former financial ombudsman Walter Merricks and is one step away from paying out £14 billion to UK adults (pictured: tennis player Naomi Osaka, sponsored by the US card giant)
The ruling by Britain’s highest court found that the court’s original decision in 2017 had committed five legal errors and that Merricks’ case needed to be reconsidered under a different, more lenient set of legal standards.
This means the competition tribunal will now have to decide whether Mastercard is likely to owe up to 300 to 46.2 million UK adults in the largest class action in English legal history, although in its judgment the court described that figure as ‘ ‘Large amounts of appreciation’ than what could actually be paid.
The US payments giant generated $11.2 billion, or just under £8.5 billion, in revenue in the first nine months of this year, down 10 percent from the same period in 2019.
Walter Merricks said: This is Money: “We were always confident we would win and I’m very happy. We have more steps to go but it’s a very difficult situation for Mastercard right now.
“There are a few more steps to follow but it’s up to you now.”
Rocio Concha, director of policy and advocacy at the consumer group ?, which was involved in the Merex case, called the ruling “a very important win for consumers.”
She said: which? He campaigned long and hard for an effective class remedy plan and the Supreme Court ruling will increase access to justice for consumers and set a standard for class claims of this type to go to trial.
“Starting today, the path to collective redress will be fairer, simpler, and more achievable, and many of the currently pending cases will be able to proceed to trial, ensuring that victims of anti-competitive conduct get the justice they deserve.”
The two-day hearing took place in the UK Supreme Court in mid-May this year
But Mastercard responded to the decision, describing it as motivated by the “beat and hope” of US lawyers backed by organizations focused primarily on making money for themselves,” and said “no consumer in the UK has made this claim.”
The case against the American Payments Corporation is a result of the Consumer Rights Act of 2015, which opened the door for a large number of consumers to “opt out” of American-style class cases, by giving plaintiffs more time to sue and by enabling anyone potentially affected to through an issue to be part of the claim even if they do not explicitly subscribe.
Walter Merricks had a class action lawsuit against Mastercard brought by a court in 2017, but both the appeals court and the Supreme Court later found that it had erred in the law.
“I would like to buy £300 new furniture”
Lisa Bullins, from Milton Keynes, said she was unaware of the Mastercard news, but the idea that the company potentially owed money for payments did not come as a surprise.
Lisa Bullins, who works for Network Rail and lives in Milton Keynes, said she would earn £300 from the Mastercard Furniture Trust.
Although she hadn’t heard of the court battle before reading the news about today’s Supreme Court ruling, she said, ‘It didn’t come as a huge surprise to me, having previously seen similar stories of others making payments to clients. .
I feel some have very high transaction fees, and this may not always be transparent to customers, or explain to customers what this means.
I think the idea of a £300 payout could benefit those who may have been victims of this, and have had a hard time because of it.
“If I find myself paying the £300 I would be very happy, especially as I am currently looking to move into a house and would like to invest some new furniture for it.”
Kenny Henderson, a partner at law firm CMS, previously said that the 2015 This is Money law made it easier to bring larger claims to court and claims that had never been brought before, given the difficulty of getting enough entrants to sign up.
Although Merex’s win does not quantify how likely Mastercard will be forced to pay up to £14bn, it does have implications for how easy it will be for these types of mass consumer claims to be made in the future.
His case had previously been dismissed by the Competition Appeals Court because it refused to endorse his claim, finding that it fell short of the appropriate standard because his claim was inappropriate. These testimony hearings are designed to weed out inappropriate cases.
But both the Court of Appeal and the Supreme Court have now rejected this view and found that the court’s decision was “undermined by an error of law”.
The decision was initially scheduled for 4 December, but was postponed after one of the three justices who initially heard the case, 72-year-old Lord Kerr, died three days earlier, having already retired from the court at the end of September.
The High Court’s ruling was delayed after the death of former Justice Lord Brian Kerr at the beginning of December
Mr Henderson told This is Money: ‘The High Court ruled that the Competition Court of Appeal applied a very strict standard on the matter of testimony.
“The Supreme Court clarified the correct standard and sent the case back to the Committee Against Torture for application of the correct standard.”
Samantha Silver, partner at the Kennedy Law Firm, said: ‘This landmark decision demonstrates the test that the Competition Court of Appeals must apply in certifying class actions and indicates that the Court has been very rigorous in the way it has previously handled these applications.
“This is likely to lead not only to the adoption of this Class Action Order by the CAT, but is also likely to set the tone for future Class Actions in England and Wales.”
Mr Henderson described the Supreme Court’s decision as “frankly huge”, and said this morning that “the ruling will encourage Plaintiff law firms to file more of these class-action suits, increasing exposure to other firms.”
He added, “We could see a greater number of lawsuits filed – and a shift towards the culture of teamwork that we associate with the United States.”
Mr Merricks’ case alleged that shoppers in the UK paid higher prices as a result of Mastercard’s illegally high card transaction fees – even if they didn’t use one themselves
In response to the Supreme Court ruling, Mastercard said in a statement: “We fundamentally disagree with this allegation and know that people have gained valuable benefits from Mastercard payments technology.
No UK consumer has made this claim. It is driven by “Hit and Hope” American lawyers, backed by organizations focused primarily on making money for themselves.
“Mastercard will ask the Competition Appeals Tribunal to avoid the serious risk that the new class action system could go down the wrong track in a fundamentally flawed case.”
Mr Merricks told This is Money he was unsure when the case would go to court, saying it “depends on the CAT being able to accommodate us, but it shouldn’t be too long.”
A spokesperson for the law firm acting for Mastercard, Freshfields Bruckhaus Deringer, said: ‘The Supreme Court rejected the appeal rather than revisit these very unusual circumstances.
However, it is important to note that there was a 2-2 split among the judges on a number of key issues, with two judges agreeing that the CAT was entitled to dismiss the proposed suit rather than uphold it moving forward.
“The court will now deal with the implications of this at a future hearing.”
“I thought the case was lost.”
Chambers, 35, told me he would use any money on a spa trip with his wife
“I’ve always been aware of the card transaction fee controversy,” Chambers, 35, told me. This is money.
“I remember hearing about how prices were inflated and if the fees were lower or eliminated, prices would likely go down for consumers.”
The environmental psychologist from Preston said he believes the case is “defeated” because he hasn’t heard anything in “several years”.
However, he said, “It’s interesting to know that it is still active and can affect millions of adults.”
He added: “As for what I’m going to spend it on, the first thing that comes to mind is paying for two nights at my favorite spa hotel in Harrogate next year with my wife, because I couldn’t go in 2020.”
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