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Mastercard sued for $19B in Britain's biggest damages claim
- webtechgal 10y agoWondering if the crux of the suit could be applicable/have implications in other parts of the world as well?
- johansch 10y agoThat's almost guaranteed. Most other parts of the world are (even) more corrupt though.
- marcoperaza 10y agoHow is it possibly fair to demand repayment for two decades of "excessive fees" which are not defined in the law and were only clarified by the EU in the last two years. Unless I'm missing some crucial information, this just looks like a shakedown of an American company.
- jayflux 10y agoIsn't this what happened with Apple in Ireland? They only decided now that it's wrong, yet they want apple to pay back for the last 20 or so years? Even though back then it wasn't seen so much as a problem.
- AlphaSite 10y agoWell no, in that case they decided that Ireland violated the treaties it previously signed. I can't compare to this case but that was only retroactive in that they discovered the problem later.
- jayflux 10y agowhich is even more confusing, as the govt is being rewarded for violating treaties by being paid back all the tax. Was the govt not more in the wrong than Apple was? (sorry, thread hijack)
- lostboys67 10y agoAnd presumably all the other states will want a share of those profits transferred to Ireland to avoid tax.
- k-mcgrady 10y agoIt's not a reward for the government, hence why they have lodged an appeal. Ireland has a lot more to lose by accepting that tax money than they would gain.
- lostboys67 10y agoJust like the Cement price fixing cartel was only found and prosecuted only after it had been running for years.
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- anon1385 10y ago> this just looks like a shakedown of an American company. Mastercard being American has nothing to do with it. UK banks have had to repay literally billions of pounds for similar things. See: https://en.wikipedia.org/wiki/Payment_protection_insurance https://en.wikipedia.org/wiki/Payment_protection_insurance https://www.theguardian.com/money/2014/sep/27/landmark-ruling-lloyds-tsb-overdraft-charges https://www.theguardian.com/money/2014/sep/27/landmark-rulin...
- Eridrus 10y agoDepends on how you try and reason about this; The fact that there was no clear definition doesn't mean it wasn't excessive beforehand, just that the definition wasn't clear. To the extent that this doesn't request damages beyond the fees collected, you could interpret this as a decade-long interest free loan to Mastercard. Obviously that's a bit of a facetious interpretation, but the fact that something wasn't spelled out as illegal doesn't mean it wasn't wrong. Of course business prefer to get away with as much as they can, but there's no reason we have to accept this as the way things should be.
- marcoperaza 10y ago"Get away with"? We're talking about market pricing decisions. There's no morality involved. Is every business in the EU supposed to be worried about violating some undefined threshold of "excessive profit"?
- Eridrus 10y ago"Market pricing decisions" are not exempt from moral judgements. See: recent medical pricing scandals in the US; Martin Shkreli/Daraprim, Mylan/Epi-Pen Mastercard isn't really in the same bucket, but we do have anti-monopoly/anti-trust measures which aren't particularly well defined and seem pretty applicable here.
- MichaelBurge 10y agoMasterCard or Visa aren't a monopoly/duopoly. At most, there's some inertia getting people to switch. The banks had the same problem getting people to use them in the first place, and it's a solvable problem if Visa decided to abuse its power. They aren't comparable at all to the old railroad, steel, and oil companies. Credit cards are an extension of the idea of a promissory note - a piece of paper with "I agree to pay you $X" written on it. It's way more practical for businesses to not use them to process payments than it is to quit using oil, or to quit using the railroads.
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- Scirra_Tom 10y agoThey are defined in the anti-competition laws. The fees charged were anti competitive.
- antisthenes 10y agoI could just as easily make an argument that the American company was shaking down European consumers for 16 years and accumulated an unfair windfall. Also, when dealing with entities of this size, laws really take a backseat. The effectiveness of any law is directly proportional to the economic damage you can inflict on the opponent.
- designium 10y agoThis shows how important for Fintech companies to care for regulations and compliance as equally or more than just focusing on the technology side.
- smitherfield 10y ago>Mastercard is alleged to have done this for 16 years between 1992 and 2008 ... Two years ago, the European Union capped the fees retailers pay at 0.2 percent for debit cards and 0.3 percent for credit cards. Seems the EU is getting rather fond of the retroactive law change shakedown, at least when it comes to US companies.
- Scirra_Tom 10y agoTwo years ago the EU capped the fees, but that's immaterial to the fact that the fees prior to that were determined to be illegal under anti trust laws. The article is confusing, it's written badly and is mixing numbers and laws up. My understanding is this is not a retro active shakedown. Also, I can only assume you're referring to Apple's case. My understanding is that calling it a retro active law shakedown is misleading. It was always illegal (who to blame for facilitating the behaviour is another question). Consumer protection was one of the main reasons I voted to stay in the EU. Without the EU's clout these companies would be exploiting consumers relentlessly indefinitely and it's good to have an entity with clout who are able to fight back.
- marcoperaza 10y agoHow is a 1% fee excessive? If you don't like MasterCard's rates, then don't accept MasterCard. If the government wants to ban such rates, then ban them. But allowing it for 20 years then digging up some vague "excessive fees" provision and demanding two decades and $20 billion worth of "excess profit" is nothing but a business-hostile dishonest shakedown.
- Scirra_Tom 10y ago> If you don't like MasterCard's rates, then don't accept MasterCard. Visa and Mastercard basically have a monopoly on the market. To not accept Mastercard would do orders of magnitude more damage to your business than the impact your protest of not accepting them would have. It's completely unrealisitic to present that as a sensible option. > is nothing but a business-hostile dishonest shakedown. From the Guardian: “MasterCard charged billions of pounds of unlawfully high fees for its sole benefit and to the detriment of consumers. It has already been found to have broken competition law, the basis of which was to protect consumers, and that cannot be disputed. There is no basis upon which MasterCard can contend that its card fees were not unlawful.” So actually, Mastercard are the ones being business-hostile here.
- mysterypie 10y ago> Two years ago, the European Union capped the fees retailers pay at 0.2 percent for debit cards and 0.3 percent for credit cards. How is it possible that retailers in the U.S. and Canada pay 2-3% for credit card usage, or ten times greater than legally permitted in Europe? I have to assume that 0.3% is profitable, otherwise the credit card companies would simply stop operating in Europe. Could this be a misprint in the original article or are Americans and Canadians being horribly ripped off?
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- cmdrfred 10y agoHow is it possible that we pay twice as much for healthcare? Same reason.
- mysterypie 10y agoBut we don't pay 10 times as much for healthcare. The credit card fee differential is inexplicable.
- ska 10y agoRight, only 4 times. Which is still hard to explain.
- chipperyman573 10y agoIt's really not. Some country has to provide financial incentives for companies to develop new drugs - a multi million dollar task - and the USA is the country that subsidiaries the rest of the world
- Chestofdraw 10y agoI've seen this said a bunch of times but never anything to actually back it up. The fact that big pharma companies tend to have fantastic margins and spend similar amounts on R&D as they do on marketing makes me think that it's probably bollocks. The idea that big pharma companies are happily scalping Americans just so they can provide drugs to countries that can't actually afford them is just... absurd.
- bimmer44 10y agoI'm intrigued by this type of case - this article doesn't mention any specific legislative requirement that fees should have been less during the period concerned. It's a strange precedent that a company can be retrospectively liable for charging "too much". This is similar to the case of Apple and their tax dues in Ireland. Maybe someone with a better grasp of legal matters can explain a mechanism that gives this case a chance. Otherwise I can't see this claim succeeding without causing a great deal of business uncertainty.
- FLUX-YOU 10y agoMy guess is they are trying to get it labeled as an invisible tax because a mastercard transaction fee wouldn't have shown on the receipt or the customer wouldn't have known they are paying higher prices due to the transaction fee.
- rayiner 10y agoIt's not that unusual in the antitrust context. The whole theory of antitrust is that anti-competitive behavior allows a company to charge prices greater than they would be able to charge in a competitive market. If a company is found to have engaged in anticompetitive conduct, it's common in a civil suit for the measure of damages to be the difference between the prices actually charged and some judicially-determined market price (usually based on an econometric expert analysis).
- bimmer44 10y agoThis makes sense - I think the Reuters article was quite misleading. I posted another comment [1] with a link to a Guardian article that supports what you wrote. [1] https://news.ycombinator.com/item?id=12463745 https://news.ycombinator.com/item?id=12463745
- jokoon 10y agoI live in france and many small stores don't accept debit card payments if it's under a certain sum, like 10 or 5 euros. I asked once, and I was answered that banks those stores for each of those payments, so stores refuse payments if it's under, that's what I think is happening. I already saw stores who don't accept debit cards. I don't know the reason, but the equipment might be too expensive for them. Obviously debit card technology is mostly american.
- tonfa 10y ago> Obviously debit card technology is mostly american. There's a french version since 1967 and it uses a chip since 1992 (probably the first country where cards with chips was in widespread use) https://en.wikipedia.org/wiki/Smart_card https://en.wikipedia.org/wiki/Smart_card https://en.wikipedia.org/wiki/Carte_Bleue https://en.wikipedia.org/wiki/Carte_Bleue
- jokoon 10y ago> In 2010, Carte Bleue was phased out and was replaced by Visa Classic debit. The system mostly relies on american systems. I don't have anything against it, it's just that originally, it's american, for the same reason PC computers technology is. Non american countries don't really have their own standard, not that it matters, but in term of how the expertise and business are owned, it does matter.
- tonfa 10y agoThe global system won (because convenience), but carte bleue worked fine for over 40 years. Many country still have their own standard (e.g. EC Card in Germany, Dankort in Denmark, etc.), but yes over time the Mastercard/Visa duopoly tends to win. And as far as I know CB was not based on american technology (and the fact that they used chip-pin so early was kinda unique), do you have source to the contrary?
- yardie 10y agoThere is a transaction charge of about 20c. Not exactly a big deal if you are spending 10-15euros in one stretch. But if you are buying 2-3euros in beers 20c can eat up all the margin.
- matt_wulfeck 10y agoI wouldn't mind using my debit card more often if it had the same type of insurance against fraud as my credit cards. I don't really care about cash back and I know that retailers pay high fees, but I don't get any kind of cash discount with debit other than gas and I don't want to risk having my check account cleaned out.
- teuobk 10y agoIf you put everything on a good cash-back card, and you pay off your balance every month, it can really add up. Let's say you run $30k a year through your card and have something like the 2% cash back Citi DoubleCash Mastercard. That's $600 a year you're foregoing by not caring about cash back. Just a thought.
- matt_wulfeck 10y agoIt's not that I don't care about cash back, but I would simply prefer prices in general be 2% cheaper rather than having to claim them via a cash back card. This type of thing warps price perception and just passes the costs back onto consumers in other ways.
- awqrre 10y agoIt probably passes the costs back onto poor consumers (or the ones that can't get credit cards).
- nfriedly 10y agoMy wife and I stopped using credit cards for most things because we're fed up with the whole system. We use cash for groceries and such, the bank pays all of the bills automatically, and we use debit cards for retailers that we trust online (mostly amazon). Credit card use is fairly rare in my house these days.
- shortsightedsid 10y agoHow do you build credit history? Also, isn't it easy to dispute credit card transactions as opposed to debit card because with a debit card money is immediately removed from your account.
- craigds 10y agoWhy would you need a credit history if you don't use credit?
- nommm-nommm 10y agoCredit score effects your insurance rates (in the majority of states) and your ability to rent an apartment.
- cowsandmilk 10y agoGetting a mortgage is the big one. That said, I think people worry too much about credit histories. And every foreigner I've met who moved to the US as a pharma scientist with a 6 figure salary has been able to get a mortgage despite not having a credit history in the US. A good credit history (vs. having none) generally seems to matter when you are getting a mortgage close to the limit given your salary.
- criddell 10y agoSome employers will run credit checks on prospective hires.
- nfriedly 10y ago
- justinlardinois 10y agoTo make sure I understand, Mastercard illegally overcharged for credit card processing, and merchants passed the charge onto consumers, so consumers have standing to sue Mastercard. If I've got that right, can someone with an understanding of British law explain how that works? In a case like this in the US I don't think consumers would be able to sue a card issuer.
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