A judge is allowing small businesses to sue the major credit card companies for forcing them to adopt chip readers at the checkout counter — a case that could become a multibillion-dollar class action.
The lawsuit takes aim at the nationwide upgrade to chip-based credit cards, an awkward rollout that’s been annoying for stores and shoppers.
Customers have found the system confusing. And it’s much slower to process transactions than the old magnetic stripe cards.
To business owners, it’s a raw deal. They were forced to upgrade to expensive machines that reduce fraud but don’t eliminate it. If they don’t upgrade, they’re penalized by the credit card companies. Stores that don’t install chip readers are on the hook whenever a shopper swipes a stolen credit card — a burden previously shouldered by banks.
The lawsuit, brought by four grocery stores in California, Florida and New York, calls it an industry conspiracy that violates fair trade practices. They sued American Express, Discover, Mastercard and Visa in California federal court in March.
The grocery store owners have yet to be granted class-action status. If they are, the case could include 8 million small businesses across the United States, according to lawyers involved in the case.
They’re seeking to recoup the costs of upgrading to the chip system, an estimated $6 billion, according to the lawsuit.
Full Content: CPI Journal
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