Apple Accused Of Antitrust Violations Over Apple Pay



Apple was sued on Monday, July 18, in a proposed class action by payment card issuers accusing the iPhone maker of abusing its market power in mobile devices to thwart competition for its Apple Pay mobile wallet, Reuters reported.

According to a complaint filed in San Francisco federal court, Apple “coerces” customers who use smartphones, smart watches and tablets into using its own wallet for contactless payments, unlike makers of Android-based devices that let consumers choose wallets such as Google Pay and Samsung Pay.

The plaintiff in this complaint is Iowa’s Affinity Credit Union, who said Apple’s anticompetitive conduct forces the more than 4,000 banks and credit unions that use Apple Pay to pay at least $1 billion of excess fees annually for the privilege. According to Reuters, Apple did not immediately respond to requests for comment.

MacRumors reported that the lawsuit was filed in U.S. District Court in Northern California. The complaint specifically accuses Apple of multiple violations of the federal Sherman Act by “tying” Apple Pay to its mobile devices and monopolizing the “tap and pay iOS mobile wallet market.”

The Verge reported the Plaintiffs claim that Apple has an illegal monopoly over contactless payments on the iPhone, letting it force card issuers into paying fees (via Bloomberg). The suit is being kicked off by Iowa-based Affinity Credit Union, which issues debit and credit cards that are compatible with Apple Pay, but the company’s lawyers hope to make it a class-action case so other card issuers can join the lawsuit.

According to The Verge, lawsuits aren’t automatically granted class-action status – a judge has to decide whether or not to grant it. However, the law firm handling the case for Affinity, Hagens Berman, has a bit of a track record with class-action suits against Apple. It was involved with getting developers a $100 million settlement after alleging that the App Store’s rules were unfair, as well as with the ebook price fixing case that ended with Apple returning around $400 million back to customers.

The complaint is against Defendant Apple Inc., and for Plaintiff Affinity Credit Union, on its own behalf and that of all similarly situated payment card issuers.

Based on everything I’ve read about this lawsuit, it appears to be focused on getting banks and credit unions a reimbursement for the fees that they had to pay in order to offer their customers an Apple Card. The lawyers for Affinity Credit Union want a class-action lawsuit, which could potentially erase the fees that credit unions were charged by Apple.

It does not mean that anyone with an Apple Card can join in this particular class action lawsuit, or that card holders will benefit financially in any way – no matter what the final decision turns out to be. In my opinion, this is a lawsuit that is being presented in an effort to reimburse a specific credit union.


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