Credit card firms settle AG suit for $3.4M

Merchants, card users will not get share of settlement over excessive fees

Credit giants Visa and Master Card have agreed to pay state Attorney General Hector Balderas’ office a combined $3.4 million to settle a lawsuit brought against them in 2014 alleging the companies illegally charged excessive fees for credit and debit card transactions.

Balderas filed the lawsuit over “alleged anti-competitive misconduct by the two companies in setting ‘interchange fees’ — fees imposed on merchants each time a cardholder swipes a Visa or MasterCard,” according to a statement released by the Attorney General’s Office on Thursday.

“Not only were New Mexico merchants harmed by these improper fees,” the statement said, “but the merchants passed a portion of the cost of these fees on to their customers in the form of higher prices for goods and services, affecting New Mexico residents. Like private merchants, state agencies were also charged interchange fees by the payment card companies.”

Despite being listed as injured parties in the lawsuit, neither the merchants nor the card users will receive a share of the settlement funds.

According to settlement agreement, “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. …”

Attorney general spokesman James Hallinan said in an email that “merchants that have paid interchange fees have their own claims that are part of a private class action [lawsuit] that is currently pending, and may provide compensation to those merchants.”

Asked why card users won’t get a share of the settlement, Hallinan said: “The action directly benefiting New Mexico consumers is still pending. By statute, the Office of the Attorney General cannot represent individual consumers.”

Part of the settlement agreement calls for the credit card companies to pay for 200,000 magnets printed with information about consumers credit rights and tools, and to pay $5,000 for the magnets to be distributed.

Hallinan said the magnets will be given out at “outreach events and training” and will be “available for consumers upon request.”

The settlement also calls for the educational information to be listed on the credit card companies’ websites.

“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,” Balderas said in a statement.

Under the terms of the settlement Visa is responsible for paying two-thirds of the settlement and MasterCard will be responsible for the other third.

Contact Phaedra Haywood at 986-3068 or phaywood@sfnewmexican.com. Follow her on Twitter at @phaedraann.