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Claim Up To $5,000 in Credit Card Class Action Before September 30

An image of a small to medium size business owner using his credit card.

Are you a merchant who accepted Visa/Mastercard anytime between January 1, 2004, and January 25, 2019? If yes, now is your chance to claim a partial reimbursement for the interchange fee these credit card networks are charging your business. In a class action lawsuit between merchants and Visa/Mastercard (the “Defendants”), the court approved a settlement; Defendants would distribute $131 million in compensation to eligible merchants. In addition, eligible small and medium-sized business owners can file a claim of up to $600 and $5,000 for 15 years.

These merchants have to file the claim before September 30 deadline. As the deadline nears, here is a quick guide to help you with the claim process.

What is the Credit Card Class Action Settlement?

Visa/Mastercard charged merchants interchange fees of around 1% to 2% of the purchase price. They also enforced rules restricting merchants from levying a surcharge on customers or directing them to another mode of payment. The court found Visa/Mastercard violated antitrust laws and ordered a preliminary settlement for merchants who incurred these fees during the 15-year claim period.

Under the settlement, credit card networks agreed to give merchants an option to pass on the interchange fees to customers from October 6, 2022. In addition, credit card networks will open a registration process where merchants will state their intent to surcharge a maximum of 2.4% and agree to notify clients 30 days before imposing it. We will leave the other part of the settlement for another day. The time-pressing issue is how to file for the claim.

Can You File Claim Under This Class Action Settlement?

The class action is between all merchants and Visa/Mastercard. You are a Settlement Class Member if:

  • You are a person or entity residing or operating in Canada.
  • You accepted Visa or Mastercard credit cards for payment of goods or services in Canada between March 23, 2001, and September 2, 2021.
  • You incurred merchant discount fees, including interchange fees.

You can file a claim even if your business has closed now but was operational anytime during the claim period and accepted credit card payments.

However, you are not eligible for the claim if you opted out of this class action before December 5, 2021, or previously settled with Visa/Mastercard. In addition, you should avoid submitting a claim in this class action if you are involved in another case with the same claims. You can’t file for the same claim more than once.

How to File a Claim in This Class Action?

You can file a claim on the online claim portal or postmarked mail, which the Class Administrator sends to all merchants. Three types of claims are available on the form depending on your annual revenue during the claim period.

  • You would be a small merchant if your average annual revenue for the claim period were below $5 million. You can submit an undocumented claim by providing your name, contact information, business size by revenue, and an attestation that you collected credit card payments at some point during the claim period.
  • You would be a medium-sized merchant if your average annual revenue were between $5 million to $20 million. You have to submit a simplified claim that requires supporting documentation.
  • If your average annual revenue was above $20 million, you are a prominent merchant and should submit a documented claim, which may require additional documentation. The deadline for the written claim is December 30, 2022, as the online form was made available on August 30, 2022.

You can submit the claim form for free and contact the claims administrator for any assistance. You can also take the help of your accountant to file the claim if the documentation work is overwhelming. As the deadline is close, an accountant can speed up the process and help you meet the deadline for a fee.

How does Claim Settlement work?

Once claims administrators receive your claim, they will review your application and approve or deny it.

If approved, you will receive the claim amount via direct deposit or cheque (after deducting the $2 cost) before the end of 2022. The settlement amount is taxable by the Canada Revenue Agency.

If denied, you will receive a decision notice on the contact information in the claim form. Small merchants with undocumented claims cannot appeal. However, medium and large merchants can appeal to an arbitrator within 30 days of a Decision Notice for a $150 filing fee.

If you dispute the claim, the administrator will require you to submit more information, such as discount fees paid, your category code or business description, and Visa and Mastercard transaction volume or total sales volume. The administrator will use this information to calculate your claim again.

Contact ESS CPAs LLP in Burlington to Help You File Your Class Action Claim

Talk to a professional accountant to help collect all the necessary information to file simplified or documented claims. At ESS CPAs LLP, our accountants and bookkeepers can provide services such as filing for class action claims. To learn more about how ESS CPAs LLP can provide you with the best accounting and bookkeeping expertise, don’t hesitate to contact us online by telephone at 905-517-2297.