Merchants sue card companies over EMV liability shift

A group of retailers believe the October 1 EMV liability shift was implemented illegally.

Just over five months after merchants were required to start accepting EMV cards or the liability of fraudulent charges, retailers have filed an antitrust lawsuit against the nation's largest credit card companies and banks, claiming the liability shift was instituted illegally.

The lawsuit, initially reported by The Recorder, alleges that the financial institutions conspired to transfer the liability for fraudulent transactions from themselves to retailers, merely using the transition to EMV cards as a mask. What's more, the complaint states that the process to get chip-enabled systems has been marred by technical issues that made it difficult for many merchants to achieve EMV certification by the October 1 deadline.

"Merchants were not consulted about the change, were not permitted to opt out, were not offered any reduction of the interchange fee, the merchant discount fee, the swipe fee or any other cost of accepting defendants' credit and charge cards," reads the complaint, according to The Recorder. "The liability shift was unilaterally imposed to the benefit of defendants, with no compensation, consultation or consideration of any kind made to the class members."

"The grocery store has seen chargebacks jump from $89 to $10,000."

The complaint was filed on March 8 in the U.S. District Court for the Northern District of California on behalf of a small grocery store chain and a liquor store in Florida, reports The Recorder. The plaintiffs' legal team is expected to soon certify a class that includes all merchants affected by the liability shift. The lawyers are pursuing damages of three times any overcharges.

According to The Recorder, citing a member of one of the law firms representing the plaintiffs, the grocery store involved in the suit has seen its fraud-related chargebacks jump from just $89 in the 12 months prior to the October deadline to more than $10,000 in the five months since. 

Representatives of both Visa Corp. and American Express Co. declined to comment for The Recorder's story. 

by Ty Hardison

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