Here’s a switch, a credit card company having to pay huge fees for
running afoul of an agreement. According to multiple media reports, MasterCard
faces a massive lawsuit over claims it defrauded U.K. consumers by charging
“illegally high fees” on store purchases. The lawsuit claims the evidence of
overcharging goes back over a decade.
The suit is interesting for many reasons beyond the inherent
irony. It’s one of the first class action suits of its kind launched in the
United Kingdom, and it is going for the throat, demanding MasterCard cough up
$18.6 billion to pay millions of Brits represented by the case.
The case also says the higher fees forced retailers to raise
prices across the board, hurting consumers, whether or not they were
cardholders. According to the lawsuit, 46 million people could have been
affected.
This case is one of those classic PR double-edged swords.
MasterCard will have to face the legal issues in court…and they will have to
face the consumer fallout in the court of public opinion. This dual-sided
trouble creates a pitfall question for the company. If they choose to fight
this battle in court – where there’s not much precedent to handicap a victor
ahead of time – the fight could become prolonged with no declared winner. The
longer things go on in the courts, the more times the story will appear in the
press. That ratio can create a second narrative in the public, and the longer
that lasts, the worse it could be for MasterCard.
The general public is not liable to take much time trying to
dissect the legal minutia. They will check the headline and let that impression
sink in, sometimes without even realizing it. Then, next time they are offered
the choice between to credit cards, they may choose The Competition … and not
even be certain why.
At the moment, MasterCard says they plan to fight the case. Saying
they would … “take time to review the claim in detail, however, we continue to
firmly disagree with the basis of the claim, and we intend to oppose it
vigorously…”
This position might play
well in the early going, but at some point, they will have to do more than wag
their fingers at the millions named in the case.Eric R. Braverman is a physician based in New York.
