A Hypothetical Timeline for the Credit Card Settlement Agreement and the Ramifications that Will Ensue

Scott E. Blakeley, Esq.
October 29th, 2012

For the settlement agreement to become effective the court, in which the case sits, must give a preliminary approval regarding the agreement. With that said, it is essential to understand the time constraints and proper dates associated with the effective agreement. A hypothetical scenario follows below and can be helpful in understanding the time constraints associated with the agreement.

If the settlement were to go into effect on Oct. 1, 2012, then there is a 180 day period for the interested parties and participants to opt in or out of becoming part of the binding agreement. This period is called the exclusion period. The 180 day period runs from Oct. 1, 2012 to March 30, 2013, at which point the class will vote to ratify the agreement if at least 75% of the dollar amount in the class joins to do so.

During the exclusion period (opt in/out period) vendors can begin passing on surcharges to customers within 60 days, which would be after Nov. 30, 2012. Note, however, that prior to any surcharge being passed on, the vendor must give 30 days advanced notice of intent to impose a surcharge fee to the customer and the affected credit card company. See the following blog post to determine what to include in the notice (hyper link to proper post – Giving the Customer and the chosen Credit Card Company Advanced Written Notice of An Intent to Impose a Surcharge Within 30 days).

Lastly, The 10 basis point reduction must be completed by May 29, 2013, which is 8 months or 240 days out from the effective agreement date (Oct. 1, 2012).

While only clairvoyance would reveal the actual settlement agreement date, in light of not knowing the exact date of the agreement execution, at least a vendor can be prepared. The above hypothetical timeline can be helpful in understanding and abiding by the days associated with the agreement terms.

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