SAN FRANCISCO—Merchants have filed a federal class-action, antitrust lawsuit here against major credit card companies and some of the nation's largest banks for the EMV liability shift that went in place in October of 2015.
That shift places the liability for fraud on the weakest link in the payments chain, whether that be a POS terminal that is not chip-card ready or what is now and old-school mag-stipe card.
The suit charges that the defendants "conspired to shift billions of dollars in liability" for fraudulent credit card transactions in the United States to merchants.
Some of the named defendants include Visa, MasterCard, Discover, American Express, Wells Fargo, Capital One, U.S. Bancorp, and Barclays, among others.
Plaintiffs B&R Supermarket, Milam's Market and Grove Liquors claim that most of the major financial institutions in the United States, Japan and China have conspired to put the burden of compensating consumers for credit card fraud onto merchants.
According to the plaintiffs, merchants have borne the brunt of not only the transition to the new system, by buying new chip readers for their stores, but they must also pass an arduous certification process before the financial institutions will agree to assume the burden for fraud, the complaint says.
However, the merchants say banks are now forcing the financial liability on stores or requiring an extensive certification process the plaintiffs claim is actually impossible to achieve, Courthouse News Service reported.
"The networks, the issuing banks and EMVCo knew from the outset - and the class members are now learning - that the 'certification' process would take years after the Oct. 1, 2015 liability shift was imposed," the complaint says.
Meanwhile, the merchants say they are incurring expenses related to fraud while awaiting word whether they had received the necessary certification, despite having purchased new machines and performed extensive training.
The merchants are suing for violations of the Sherman Antitrust Act's prohibition on agreements to restrain trade and its California equivalent, and unjust enrichment. They seek treble damages, Courthouse News Service reported.