Wednesday, June 6, 2018
The state of New Mexico reached a $3.4 million settlement with Visa and Mastercard. The settlement stems from a 2014 lawsuit that called into question credit and debit card interchange fees assessed New Mexico merchants and state agencies, alleging they were excessive in violation of state law.
Visa and Mastercard agreed to settle "without any admission of liability or wrongdoing whatsoever," according to the settlement document. Under terms of the agreement, Visa paid about $2.2 million into a settlement fund and Mastercard paid about $1.1 million. The two companies also agreed to join and pick up the cost of a consumer financial education campaign to be launched by the state attorney general's office.
"We negotiated an agreement that will compensate the harm to New Mexico's economy, enforce our strong consumer protection statutes and deter companies that seek to exploit our citizens and violate our consumer protection laws," state Attorney General Hector Balderas said regarding the settlement in April. Balderas, in his complaint, alleged that interchange affects not only merchants in New Mexico, but consumers in the state as well, because merchants pass along a portion of card costs to consumers in the form of higher prices.
Despite being identified as injured parties, neither merchants nor consumers in New Mexico will see any of the settlement money. "It is the State's position that the settlement amount and related injunctive relief are intended to remediate the harms to the State and its communities resulting from the alleged unlawful conduct of the Defendants, and that the settlement amount shall be expended, in the sole discretion of the Attorney General, to enhance the Office of the Attorney General's law enforcement efforts to prevent and prosecute financial fraud or unfair or deceptive acts or practices, including anti-competitive behavior, and to investigate, enforce and prosecute other illegal conduct related to financial services or consumer protection and antitrust laws," the settlement document stated. It added that Visa and Mastercard "do not join in or agree with the State's position."
New Mexico was one of thousands of parties that opted out of the $7.25 billion settlement reached in 2013 over an eight-year-old lawsuit that accused Visa, Mastercard and several large banks of interchange price fixing. That lawsuit is often referred to as the Walmart suit, as Walmart was an original complainant. The 2013 settlement was subsequently thrown out by a federal appeals court, and the U.S. Supreme Court has refused to weigh in on the case, leaving the appeals court ruling intact.
Balderas, in announcing the settlement, said the state's complaint survived attempts by Visa and Mastercard to have it dismissed. The judges in the case, Raymond Ortiz and Sarah Singleton of the First Judicial District, in Santa Fe, rejected those pleas.
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