WASHINGTON (CN) – Visa and MasterCard are “ringleaders and enforcers” of a nationwide scheme to fix the surcharges that consumers pay to use ATM machines – and “every principal U.S. bank” is in on the deal, the National ATM Council claims in an antitrust class action.
Joined by 13 other associations in Federal Court, The National ATM Council claims that “the banks collectively have ceded power and authority to Visa and MasterCard to design, implement, and enforce a horizontal price-fixing restraint in which they are knowing participants. In short, the violation in this case is a horizontal agreement among every bank that issues Visa- or MasterCard-branded payment cards – including every principal U.S. bank – organized and supervised by the defendants as ringleaders and enforcers for the purpose of fixing the surcharge that consumers pay for ATM services.”
The plaintiffs say that to offer ATM services to Visa and MasterCard holders, the credit-card giants force them to charge the same transaction fee to consumers regardless of what card or network the consumers use.
While operators may charge any surcharge they wish, the surcharge must be the same for all customers, the class claims. In other words, a customer of a nonbank ATM who uses a Discover card or a STAR network card – which cost less to use – must pay the same surcharge as someone who uses a card with the Visa or MasterCard logo.
The class defines itself as “approximately 350 nonbank, independent sales organizations (‘ISOs’) that are sponsored by one or more sponsoring financial institutions and are registered with Visa and MasterCard as ‘registered ATM ISOs,’ together with an even greater number of the ISOs’ ATM-operating contractual affiliates”.
The plaintiffs say, “Independent ATM operators deploy slightly more than half of the ATMs presently in service in the United States, or approximately 200,000 terminals.”
The class’s lead counsel Jonathan Rubin told Courthouse News: “Visa and MasterCard look like suppliers to the banks, but they’re really the banks’ alter egos. … The [individual] banks are the co-conspirators, but it’s not necessary to sue each of them because Visa and MasterCard are the banks.”
There should be “differential surcharging,” Rubin said. “Prices should reflect the cost to produce. Without that give and take we can’t have a competitive marketplace.”
Rubin added: “Most consumers have no idea what the costs are – there is no transparency” in the banking industry regarding ATM network pricing. “It’s the cartel manager theory.”
The 21-page complaint claims that the constraints upon ATM operators “unreasonably restrain competition in the market for ATM services in the United States” and “restrain trade and interstate commerce” in violation of Section 1 of the Sherman Act.
The plaintiffs seek an injunction against price fixing, which would allow cardholders to choose their ATM network, and treble damages.
Co-counsel with Rubin include Brooks Harlow and David La Furia with Lukas, Nace, Gutierrez and Sachs of McLean, Va.