Why are you paying Visa's legal fees?

• Author: BondGraham, Darwin

THE ORIGIN OF THE WORD credit is, in the Latin credo, translated as I believe. Credo is a religious, absolute faith. When applied to the profane world of business, it reflects the faith between the lender and the borrower. It's ironic then that the consumer credit card industry, taking its name from this sacred expression of faith, is so riddled with allegations of fraud and conspiracy.

If you used a Visa or MasterCard any time in the past eight years, you very likely were party to, and perhaps even a victim of, the biggest antitrust conspiracy in U.S. history involving the theft of tens of billions of dollars by the two dominant credit card companies.

In 2005, a group of retailers, along with trade groups like the National Restaurant Association, filed suit against Visa and MasterCard. The retailers alleged that the card companies used their duopolistic power to extract arbitrarily high swipe fees charged to purchases.

Together, Visa and MasterCard dominate the credit card market. Visa runs roughly 40 percent of all credit card transactions in the United States, MasterCard about a quarter. The lawsuit proceeded through a fact-finding phase with the plaintiffs gathering evidence that the credit card companies rigged swipe fees to extract billions of dollars from several million merchants and their consumers.

As with most complex white-collar cases, the one against Visa and MasterCard seemed destined to avoid a jury verdict. Last year, Visa and MasterCard bargained a pretrial settlement that won a judge's approval. The agreement garnered headlines that used phrases like "biggest ever," and "record payout." Under terms of the settlement, the credit card companies agreed to hand over $7.25 billion to the plaintiffs and their lawyers to make the lawsuit go away. The credit card companies admit to no criminal wrongdoing. The agreement "releases [Visa and MasterCard] from all claims that 'are alleged or could have been alleged' in the litigation," language that effectively immunizes the companies from future anti-trust lawsuits.

Even so the monetary settlement is substantial. So, case closed, justice done?

Not quite. The credit card companies are passing on part of the cost of their alleged crime to shoppers. It's all there in the fine print, written partly by Visas white shoe lawyers, and tempered by a U.S. legal system the financial industry itself helped reshape over the past two decades.

The settlement payout, as big as it is, is only a...