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Monday, July 23, 2012

Legal actions in the payments sphere

While the long, drawn-out lawsuit known collectively as the "Wal-Mart case" apparently settled, other payments-related legal matters are in the news.

WikiLeaks wins judgment against Valitor

A ruling by the Reykjavík District Court in Iceland said Icelandic acquirer Valitor must resume processing payments for the controversial document disclosure organization WikiLeaks. If Valitor fails to comply with the order within two weeks from the July 12, 2012, judgment date, the court will impose a daily fine of 800,000 krona (which translates to over $6,000) per day that Valitor violates the order. However, Valitor's payment processing gateway will reportedly remain closed to Data Cell Ltd., the website hosting company for WikiLeaks, while the processor appeals the verdict.

The case stems from Wikileak's November 2010 document dump when it made public 250,000 U.S. State Department cables, which prompted Visa Inc. and MasterCard Worldwide, along with other financial service firms, to stop online donations to WikiLeaks from being processed over their networks. WikiLeaks said this financial "blockade" reduced donations to the international online organization by over 95 percent and cost it over $20 million.

Thus Valitor, a partner of both Visa and MasterCard, stopped processing donations to WikiLeaks via WikiLeaks' Data Cell-hosted website. Data Cell then sued Valitor for allegedly violating contractual agreements.

Square says hands off to mPowa

The stakes for the mobile merchant market are high when one mobile service provider gets its legal team involved over an arguably generic image that appeared on a competitor's website. Square Inc., the mobile payment company for micro-merchants, alleged the image of a hand swiping a card through a dongle attached to a smart phone that appeared on the website of its mobile payment competitor mPowa was a copy of an image on Square's website.

Square's law firm Fish & Richardson P.C. sent a letter on July 10, 2012, to the founder and chief executive officer of U.K.-based Powa Technologies Inc., the parent company of mPowa, requesting that the image be removed from the mPowa website. "The copying of Square's image is clear and obvious," the letter stated. "Indeed, it appears that mPowa's infringement is intentional and deliberate, and that mPowa's attempt at imitation may extend to other key Square intellectual property, including the Square website and Square's trademarks and trade dress."

In addition, Square's lawyer requested mPowa explain the details of how the image came to be posted on mPowa's website, whether other "Square efforts" were copied by mPowa and what steps mPowa will take to ensure future copying of Square intellectual property will not happen.

The image no longer appears on mPowa's website.

U.S. Bank settles overdraft fee lawsuits

The Coral Gables, Fla.-based law firm Grossman Roth P.A. reported July 2, 2012, that U.S. Bancorp subsidiary U.S. Bank settled class-action lawsuits concerning overdraft fees. The national bank agreed to pay $55 million to consumers whose debit card transactions were manipulated to generate excess overdraft revenues for the bank, according to the law firm.

The lawsuits alleged U.S. Bank conducted improper procedures by re-sequencing the order of customers' debit card and ATM transactions to post payments in a highest-to-lowest dollar amount order instead of by when each individual payment was made.

"According to the lawsuits, U.S. Bank's practice resulted in its customers being charged substantially more in overdraft fees than if the debit card and ATM transactions had been posted in the order in which they were initiated and authorized," the law firm said.

The consumer advocacy group Center for Responsible Lending called the practice "cooking the books."

The lawsuits against U.S. Bank are part of multidistrict litigation that involved the same alleged debit card transaction manipulation at over 30 banks. The Fla. law firm said Bank of America Corp. approved a $410 million settlement in 2011, with settlements by JPMorgan Chase & Co. ($110 million), RBS Citizens N.A.'s Citizens Bank ($137.5 million), TD Bank N.A. ($62 million) and PNC Bank ($90 million) announced in recent months. end of article

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