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Landmark ruling paves way for £14bn Mastercard redress scheme

Paloma Kubiak
Written By:
Paloma Kubiak

A long-running campaign for mass consumer redress from Mastercard has been given the go ahead, paving the way for £14bn to be awarded to 46 million people.

The Supreme Court has dismissed an appeal by Mastercard over its disagreement with the claim that unsuspecting UK shoppers suffered losses as a result of illegal card fees.

This benchmark decision means the £14bn lawsuit against the credit card firm has been given the green light, bringing justice one step closer for the 46 million Brits who paid higher prices on everyday purchases.

Mastercard lawsuit

In September 2016, former Financial Ombudsman Walter Merricks launched proceedings against Mastercard for losses suffered as a result of illegal card fees.

It was the first mass consumer claim brought, following the European Commission’s decision in 2007 that Mastercard breached competition law by fixing default interchange fees as part of its payment card scheme between 1992 and 2007.

Merricks sought redress for UK consumers, stating that unsuspecting UK shoppers bore the brunt of these credit card fees through higher prices of everyday purchases whether they paid by cash or card. Mastercard’s fees were a significant cost for retailers that was then passed on to consumers through increased prices of goods and services.

Mastercard firmly disagreed with the basis of the claim and in 2017, the Competition Appeal Tribunal (CAT) initially found in favour of Mastercard, refusing to allow the proceedings to be brought against the company.

However, last year, the Court of Appeal found in favour of Merricks on all grounds of appeal. It said the Tribunal’s initial judgment contained errors of law.

Today’s judgment from the UK’s highest court has dismissed Mastercard’s appeal. It agreed with the Court of Appeal that the CAT’s decision is undermined by error of law and sends Merricks’ application for a Collective Proceedings Order (mass consumer claim) back to the CAT.

‘Hugely important win’

Rocio Concha, Which? director of policy and advocacy, said: “This is a hugely important win for consumers. Which? has campaigned long and hard for an effective collective redress scheme and the Supreme Court’s ruling will increase access to justice for consumers and set the standard for collective claims of this nature to proceed to trial.

“From today, the route to collective redress will be fairer, simpler and more attainable, and many cases that are currently on hold will be able to proceed to trial, ensuring victims of anti-competitive behaviour can get the justice they deserve.”