It is perhaps a sad indictment of the UK financial system that when news breaks that a major financial institution is being hauled over the coals in favour of consumers – who may get a HUGE payout if fault is found – that we at Good With Money towers collectively spit our tea across the room.
Such is the case this week, however, with the news that the UK Court of Appeal has overturned a ruling dismissing a £14 billion class action against Mastercard for charging ‘anti competitive’ interchange fees over a 16 year period.
The case, brought by former chief of the FOS Walter Merricks could see any Brit that held a Mastercard between 1992 and 2008 receive £300 each. That’s 46 million of us, or nearly 70 per cent of the current population.
It follows a ruling by the European Commission back in 2007 that the type of cross-border charges (or interchange fees) levied on retailers to allow them to process Mastercard payments during the period were in breach of competition law.
According to Merricks, these charges resulted in higher prices in the shops over this time as retailers tried to make up losses, leading to the detriment of every consumer – even those without a Mastercard. As such, if the case is successful, it could see even more people awarded a payout.
While being an absolute win for almost any UK adult, this case is also hugely important for the future of consumer rights in the UK. This is because it is one of the first collective class actions to be brought since the updated Consumer Rights Act allowed them in 2015.
Common in the US, these types of suits allow complainants to pursue any company for breaches of UK or European Union competition law.
The case was first thrown out in 2017 by the Competition Appeal Tribunal (CAT) – the new body assembled to judge this new breed of lawsuit. However, on Tuesday the Court of Appeal deemed that CAT didn’t apply the correct tests to Merricks’ numbers – meaning the CAT must reconsider.
If it decides that Merricks does, in-fact, have a case then it will go to trial where it will become the biggest and most complex case of its kind in British legal history. And even for Mastercard, £14 billion would hurt – a lot.
Commenting on the case, Merricks told the UK media: “I am very pleased with today’s decision. It is nearly 12 years since Mastercard was clearly told that they had broken the law by imposing excessive card transaction charges, damaging consumers over a prolonged period.
“When challenged, all they have done is to raise technical legal arguments that turn out to have no merit – as the court of appeal has shown today. It’s now time for Mastercard to admit the damage they did, to apologise to the British public, and to agree to pay the compensation they owe.”
Mastercard, of course, is having none of it. As one might expect, it says it “fundamentally disagrees” with the basis of the claim and will – if necessary – fight it all the way to the supreme court.
Now, while the temptation may be to raise a collective eyebrow coupled with a defeated “good luck” grimace at Merricks, it is important to remember the climate in which this case is coming. We are, arguably, entering a new world of accountability in the corporate sphere.
Nowhere to hide
Thanks to the miracle of the internet, there are now fewer and fewer shady corners for bad companies to hide in, with court cases that might have previously gone unnoticed by the general public making global news faster than feces can hit a propellor blade.
Examples include Volkswagen, whose emissions rigging transgressions continue to plague it since they were uncovered in 2015 – costing €33 billion and counting while the firm’s share price remains 35 per cent below where in was four years ago.
Similarly, Johnson and Johnson is currently facing more than 11,000 law suits for – according to a recent Reuters story – knowingly giving it’s customers cancer with its asbestos-laden baby powder. The class action it is facing is similar to that looming over Mastercard in the UK.
We now also know about what these guys are up to before they even hit the courts – with banks like HSBC frequently having their drug money laundering, coal financing activities called out by NGO’s and activists groups, Ditto for the fossil fuel industry and its propaganda machine.
Mad as hell
And what is more, increasingly we are beginning to take action on these dastardly dealings. Again this is thanks in many way to the web – where we can see that we have rights, so we have power, and so we can make a difference.
Whether that be by boycotting a brand, putting pressure on major institutions to divest, or switching our service providers to ethical and sustainable options, people all over the world are finally standing up and saying “We’re mad as hell, and we’re not going to take it anymore!”
This, almost certainly, can only lead to Good things. If we choose to act together we really can make a change – especially with our money. Where and with whom we choose to spend and save is literally what makes our capitalist world go round. And so to change it, we need only change where that capital flows.
So, when you do get that £300 pay-out from Mastercard, have a think about what to do with it. Think of Walter Merricks fighting long and hard to bring one of the world’s biggest financial institutions to task, and of what £14 billion – enough to build 10 Thames Barrier’s – could do.
If you need some inspiration, check out the Good Guide to Impact Investing: you’re bound to find something that will float your boat.