Two Vancouver law firms are alleging that Canada’s major banks and credit card companies are involved in a price-fixing conspiracy.
According to a notice of a civil class action suit filed Monday in the BC Supreme Court, the scheme revolves around the fees merchants pay for every credit card transaction.
Whenever a consumer makes a purchase with a credit card, Visa or MasterCard, the card-issuing banks and the company that processes the transaction take a percentage fee.
According to the suit, the fee varies depending on what kind of credit card is used.
The firms, Branch MacMaster LLP and Camp Fiorante Matthews, have alleged that Visa and MasterCard rules force business owners to accept every type of credit card, “even if those cards carry high fees for the merchant.”
As a result, business owners raise the prices on their goods to compensate themselves for the cost of transactions with premium cards.
“Our research suggests that these fees cost Canadian merchants $5 billion in 2009 alone,” said Ward Branch, partner at Branch MacMaster.
“The system is bad for Canadian merchants, Canadian consumers and for the Canadian economy.”
The suit has been filed as a class action, represented by Mary Watson, a Vancouver furniture storeowner.
The defendants include Bank of America Corp., BMO Financial Group, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Capital One Financial Corp., Citigroup Inc., Federation Des Caisses Desjardins Du Quebec, MasterCard International Inc., National Bank of Canada Inc., Royal Bank of Canada, Toronto-Dominion Bank and Visa Canada Corp.
Greg McMullen, a litigation associate with Branch MacMaster, said a similar class action suit has been working its way through New York’s court system for some time, and it could be a year or more before its Canadian counterpart is certified as a class action, if at all.
The suit seeks to recover the fees that credit card companies and banks have allegedly collected illegally from merchants.
Said McMullen: “This is one of the few class actions where everybody in the country will notice a difference if it’s successful.”