Customers in a long-running class action lawsuit against Mastercard will be eligible for just £2.27 each if all claimants come forward, it has been revealed.
In a proposed settlement, Mastercard has agreed to pay £200million in order for the class action to be discontinued, but did not admit any liability.
This sum is a far cry from the £14billion payout the payments giant was facing to as many as 46million eligible claimants – or some £300 each.
The funder of the litigation, Innsworth Capital, will take £45.57million of the agreed settlement to cover the costs incurred and future costs.
However, a further £54.43million could be paid to Innsworth as a return on its funding, with the amount depending on the number of claimants who come forward.
Innsworth is launching arbitral proceedings in the potential hope that it might be able to up its payout, The Times reports.
Class action: As little as £2.27 could be paid to claimants, despite hopes that payments could reach £300 each
The likelihood is that a large number of the millions eligible will not make a claim. In their absence, claimants could receive higher payouts.
Mastercard suggested a £40 cap, while Merricks called for a cap of £70.
The lawsuit has been running for nine years, with an initial £10billion sought by consumer champion Walter Merricks, who alleged that Mastercard charged unfairly high fees to UK customers in the late 1990s and early 2000s.
The Supreme Court previously said this was ‘a considerable over-estimate’ of the payments claimants could actually receive.
Seema Kennedy, executive director of Fair Civil Justice, said: ‘After almost nine years of litigation – including huge costs to the British taxpayer in funding countless hearings – we now know that affected consumers stand to gain just over £2 each in compensation, while the funder could be in line for a £100million payout.
‘This is the economics of a legal system in which lawyers and funders are prioritised over British business and consumers.
‘This claim shows why reform is so badly needed, and we will continue to call on the Government to introduce measures to improve transparency and accountability of the funding sector.’
In December, Innsworth said a proposed £200million settlement would be ‘too low and premature’, while Boris Bronfentrinker, the solicitor representing Merricks, said the deal was a ‘very good outcome for UK consumers’.
Concerns have been raised about the viability of class action litigation in the UK, with Bronfentrinker warning funders look to ‘advance their financial position over and above all other considerations,’ adding that Innsworth’s claims the settlement as rushed were ‘unfortunate but not unsurprising.’
The application for the settlement is set to be discussed at a Competition Appeal Tribunal hearing.
The case is the first of its type to be brought before the UK’s Supreme Court, having initially been thrown out by the Competition Appeal Tribunal in 2017.
Eligible claimants must have been a UK resident over the age of 18 as of 6 September 2016.
They also must have lived in England, Wales or Northern Ireland between June 1997 and June 2008, or in Scotland between 1992 and 2010, and paid for goods using a Mastercard credit card during this time.
