Mastercard Says ‘No’ To Compound Interest In $19 Billion Class-Action Suit

Already facing a historic $19 billion class-action suit in the U.K., Mastercard is fighting an attempt to add compound interest to the plaintiff’s claim. According to Reuters, the credit card company pushed back against the notion of compound interest in court this week during a two-day hearing to determine the scope of the case.

The suit accuses Mastercard of overcharging close to 60 million British residents including 14 million people who have since died over the course of 16 years. If successful, the suit would entitle these people or their estates to roughly 300 pounds each.

Speaking before the Competition Appeal Tribunal, a company attorney said common law did not assume that compound interest would accrue on such claims. “The law is not the same as economic theory,” he said. “In most cases, simple interest is going to be perfectly adequate as a means of compensation.”

According to Reuters, Mastercard was also expected to make arguments on Friday (March 26) about why claims from deceased people should be thrown out. From there, the court has to determine whether this claim the first of its kind in Britain should be considered a collective action.

Lead plaintiff Walter Merricks, who is being advised by the law firm Quinn Emanuel, claims that Mastercard charged exorbitant “interchange fees” which retailers pay credit card companies when consumers shop with that card and that those fees were passed onto consumers in the form of higher retailer prices. Mastercard counters that consumers derived valuable benefits from its payments technology. They say the suit is being driven by lawyers in the U.S. with the help of organizations hoping to make money for themselves, Reuters reported.

The lawsuit was filed in 2016, a year after the Competition Appeal Tribunal (CAT) was named to handle the U.K.’s “opt-out” class-action system for breaches of British or EU competition law. According to reports, Mastercard and Visa lost a suit in the U.K. last year over swipe fees, with a court ruling that both companies suppressed retail competition with multilateral interchange fees.