VISA and MasterCard could face billions of dollars in damages if retailers win a lawsuit over accepting VISA and MasterCard-branded debit cards. The escalating liabilities are possible following a federal judge's decision last week to certify the retailer's debit card lawsuit against VISA and MasterCard as a class action. The lawsuit, originally filed by Wal-Mart, Sears and eleven other retailers, contends retailers are victims of an illegal tying arrangement, under which merchants are forced to accept VISA Check and MasterMoney debit cards. VISA and MasterCard's off-line debit cards require considerably higher merchant fees than competing online debit cards offered by regional networks. Last week's ruling by U.S. District Court Judge John Gleeson means the plaintiffs will represent the interests of more than four million U.S. retailers. The Wal-Mart lawsuit seeks treble damages and various forms of injunctive relief. Actual damages under the lawsuit have been estimated at more than $8 billion which translates into a possible $24-$48 billion exposure for VISA and MasterCard members. VISA and MasterCard have indicated they intend to appeal the class action decision. Contrary to some press reports, the Wal-Mart case and the on-going U.S. Department of Justice antitrust litigation involving duality/ bylaws are separate and distinct legal actions. In January of this year, U.S. District Judge John Gleeson, ruled the DOJ could access the Wal-Mart case counsels' analyses of three million discovery documents provided by VISA and MasterCard. However there has been no effort to merge the actions. In February of 1999, the U.S. Federal Trade Commission referred its investigation into potentially anti competitive practices in the debit card industry to the DOJ. Reportedly the DOJ debit investigation remains active. Last Thursday, CardWeb.com's CEO, Robert McKinley, was deposed for eight hours by attorneys representing VISA, MasterCard and the DOJ in the duality/bylaws case. McKinley previously testified in the 1992 VISA-MountainWest (Discover) antitrust trial as an expert witness for VISA. The DOJ duality/bylaws trial is set for June of this year.