Fed Up Merchants File Lawsuits Over EMV Credit Card Chargebacks

By Wayne Rash  |  Posted 2016-08-02 Print this article Print
Merchant EMV Suits

The other set of lawsuits, one of which is a class action lawsuit from a number of plaintiffs who were unable to get their new EMV terminals certified, claims that by requiring the certified EMV terminals and then not making certification available, the credit card companies were unfairly forcing them to pay for chargebacks when they were unable to accept EMV cards through no fault of their own.

All of the lawsuits are being heard in federal court because they allege violation of the Sherman Antitrust Act and the Clayton Antitrust Act. The lawsuits claim that the banks and card issuers were in collusion when they set the credit card rules and when they chose not to allow the use of more secure authentication.

Meanwhile, Visa is suing Walmart for using a non-Visa PIN network so that it can require the use of PIN codes for EMV debit cards. There's federal law that's supposed to allow merchants to choose their debit card processing network, but apparently Visa is trying to work around that. A number of merchant industry groups are working to get credit card processing networks covered by the same law, but currently they're not.

Adding insult to injury, when merchants pay their credit card processors for the service, part of the payment is supposed to cover the cost of chargebacks due to fraudulent use. After the liability shift, the credit card merchant fees haven't changed, even though the merchants are now paying for the chargebacks. Effectively, they're paying double for those chargebacks.

So far, the credit card companies and the banks have shown little interest in helping their merchants, either by speeding up certification or by lowering merchant processing fees. But that may change. According to a representative for the law firm handling the class action suit, the defendants—Visa, MasterCard, etc.—are required to respond to the complaints by this week.

What has become clear in all this is that the transition to what were supposed to be secure payment cards in the United States has become a mess. If the plaintiffs are to be believed, it appears that the credit card companies and the banks have found a new means to rip off merchants and their customers.

While the credit card companies and their banks probably would beg to differ, the allegations in the suits are pretty compelling. My experience in years of covering this area of payment card security seems to support that.

For that matter, so does my personal experience with chip and PIN cards—two credit cards I use that used to be chip and PIN payment cards now aren't—they've been devolved into signature cards, and repeated efforts to change them back have been rebuffed.



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