Grocery Store Owners Sue Credit Card Companies Over New Chip Readers

By:
Chris Gaetano
Published Date:
Oct 5, 2016
ChipCard

Four grocery store owners from California, Florida and New York have filed suit against all the major credit card companies over requirements to switch from magnetic swipe technology to chip readers for debit and credit card transactions, saying that the new policies represent illegal collusion that has harmed their business, according to CNN Money. Credit card companies, last October, imposed new rules on retailers requiring that they upgrade to this new technology in order to combat fraud. Retailers, however, have lagged in adopting the new readers, which made up only 20 percent of terminals as of this past April. The process can be time consuming and expensive, as retailers would not only need to buy the new readers, but also provide training on how to use them, and get the hardware certified as well, a process that can take months. All the while, retailers can also now be held liable for fraudulent purchases made at their store, whereas before responsibility defaulted to their banks. The plaintiffs are seeking $6 billion as a way to recoup the costs of making the upgrade. The judge, who had previously worked as an anti-trust attorney, said he was bothered by what seemed to be collusion on the part of a credit card industry operating in what he characterized was lockstep, according to CNN Money, and so allowed the case to proceed. While the store owners are seeking class action status on the case, this has yet to be granted. 

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