US Merchants Sue Visa, Alleging Unfair Dominance in Debit Card Market

Visa, one of the world’s largest payment card companies, is facing fresh legal scrutiny after a group of U.S. merchants filed a lawsuit accusing the company of anticompetitive practices. According to Reuters, the new legal challenge comes just a week after the U.S. Department of Justice filed a major antitrust lawsuit against Visa, escalating legal pressure on the financial giant.

The lawsuit, initiated by All Wrapped Up Signs and Graphix, a Florida-based advertising and marketing firm, was filed on Tuesday in a Manhattan federal court. The proposed class action is the first private antitrust case that builds on the claims presented by the Biden administration. Like the Justice Department’s case, the merchants’ lawsuit alleges that Visa has stifled competition by paying potential rivals to avoid developing competing payment networks and penalizing merchants with increased fees if they opt for alternative platforms to process debit card transactions, imposing fees that allegedly exceed $7 billion annually on merchants for processing transactions.

“While merchants suffer, Visa profits,” the lawsuit claims, underscoring the detrimental impact the merchants believe Visa’s practices have on businesses.

Read more: The Justice Department Challenges Visa’s Power

Visa has yet to respond to requests for comment on the new lawsuit, Reuters noted. However, the company has previously rejected the Justice Department’s allegations and expressed its intent to contest the government’s case in court.

Related: Missing Pieces: What the Pundits Get Wrong About the DOJ Debit Interchange Lawsuit Against Visa

Dan McCuaig, an attorney representing All Wrapped Up, stated that the legal team is eager to “vigorously represent a class of businesses harmed by Visa’s anticompetitive practices.” The lawsuit aims to establish a class action, potentially including hundreds of thousands of small and large businesses that claim to have been affected by Visa’s business practices.

Per Reuters, private lawsuits often follow major government actions against large corporations, which can lead to significant financial consequences for the companies involved, as they face the prospect of paying larger damages. All Wrapped Up’s legal team, Cohen Milstein Sellers & Toll, has a history of litigating against Visa and Mastercard on behalf of gasoline retailers in Brooklyn federal court over allegedly excessive “swipe” fees on credit card transactions.

The case, titled All Wrapped Up Signs and Graphix v. Visa, is being handled by the U.S. District Court for the Southern District of New York, under case number 1:24-cv-07435.

Source: Reuters