American Express Sued by Antitrust Division for Unfair Merchant RulesThe Justice Department filed an antitrust lawsuit against American Express (AXP) Monday, alleging that the financial institution has been engaging in anti-competitive practices. In the same statement, the Justice Department said it reached a proposed settlement with Visa (V) and MasterCard (MA) over similar charges.

The credit card companies were charged with enforcing rules that prevented merchants from offering consumer discounts, rewards or information about card costs, the Justice Department said in statement. The companies also boost the cost of business by prohibiting merchants from encouraging customers to use credit cards that cost them less to accept, said the Justice Department, which was joined in the complaint by seven states, including Texas, Ohio and Maryland.

At issue is the dominance of Visa, MasterCard and Amex among U.S. credit card companies, which pull in about $35 billion a year in so-called "swipe fees," which are charged to U.S. merchants each time one of their customers uses a credit card. Amex's swipe fees are the industry's highest, according to the Justice Department.

"These restrictive rules restrain competition among credit card networks for merchant acceptance and distort the competitive process," said Christine Varney, assistant attorney general in charge of the Justice Department's antitrust division, in the statement.

American Express Says It Won't Settle


Under the proposed settlement with Visa and MasterCard, merchants will be allowed to offer discounts to customers who use credit cards with lower swipe fees, disclose certain credit card preferences and inform customers about the different swipe fees, according to the Justice Department.

American Express said in a statement Monday that it has no intention of settling. The claim "represents an extraordinary retreat by the antitrust division," said Amex CEO Kenneth I. Chenault. "Instead of promoting competition, it now seeks to promote regulation that would ultimately limit competition."

American Express processed $420 billion in consumer purchases last year, while MasterCard and Visa processed $477 billion and $764 billion respectively, according to the Justice Department.

American Express shares fell 5.1% to $39.65 at about 3 p.m. Monday. MasterCard shares were down less than 1% to $222.92, while Visa shares were little-changed at $73.58.


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Gigi Rodriguez

I heard of www.free-merchant.com where swiping fees seem far more reasonable. Those of you who are merchants should give them a look.

October 22 2012 at 5:44 PM Report abuse rate up rate down Reply
eturi68289

Justice is doing nothing for the consumer here. Major retailer now force the stupid consumer to enter a pin at the point of sale becuse it costs them less. The industry was forced to lower the debit rates for swipe transaction by a half of one percent. Do the retailers give the consumer a discount? NO. this is just the merchant trying to cut their costs to make more money in the name of the poor "consumer" and they will not pass on any savings the consumer. They should be doing it to day for debit pin entry and they do not. The Obama nuts do not even understand this.

October 06 2010 at 4:34 PM Report abuse rate up rate down Reply
uarchangle2

WHAT A RIP-OFF!

October 05 2010 at 8:25 PM Report abuse rate up rate down Reply
Nancy Carol

How sad that " WE " the people let this stuff happen . "We" the people have to take charge .It's time things change for the better . We need to Stop the greedy and start helping Ourselfs . Things will never change unless We the people (the poor working person ) make that change .

October 05 2010 at 12:31 PM Report abuse +1 rate up rate down Reply
mwh112739

These number are hard to believe I have never had a merchant make any sugestion of what card to use I don't believe the whole story is being told , I believe the Justice Dept. could be doimg more important things than trying to run peoples life .

October 05 2010 at 12:23 PM Report abuse +2 rate up rate down Reply
1 reply to mwh112739's comment
eweckt

A merchant has never made this suggestion, because he is contractually prevented from doing so. The DOJ isn't trying to run people's lives, just trying to keep things more competitive, and thereby, less expensive for the the people. May Good bless the Justice Dept. for taking on the corrupt, usurious Credit Card companies and the complicit banks.

October 05 2010 at 12:58 PM Report abuse -2 rate up rate down Reply
eweckt

If you read this article more carefully, you see that the Credit Card companies were charged with enforcing anti-competitive rules. Unless you have read a copy of the contract between a merchant and a credit card company, you really aren't in a position to competently comment on this relationship. Some of the informaton posted here is inaccurate. In the case of Amex; our swipe fee had been REDUCED to 3.25% after years of loyal patronage. This is twice the fee charged by Visa and Mastercard. The rules prevent us from directing the consumer to a less expensive card. In our industry where the average mark-up is only 10%, that 1.6% difference is considerable. No one is saying that Amex can't charge whatever they want; they just can't enforce anti-competitive rules.

October 05 2010 at 12:03 PM Report abuse +3 rate up rate down Reply
EDWARD

Greed Greedier Greediest. How much is enough?? Amex is nothing more then a bunch of greedy bastards. Never liked them ever................... Did you know that in the 1800's old west, cowboys use to HANG bankers. Gee, I wonder why?? Let's bring back the cowboys..................

October 05 2010 at 11:47 AM Report abuse -2 rate up rate down Reply
jacalou007

TRANSPARENCY IS THE ISSUE AND OF COURSE CONSUMERS HAVE THE RIGHT TO KNOW DIFFERENT FEES CHARGED BY DIFFERENT CREDIT CARD COMPANIES. WE ALSO HAVE THE RIGHT TO CERTAIN DISCOUNTS THAT MERCHANTS MIGHT CHOOSE TO GIVE US BASED ON THESE FEES. HURRAY FOR THE JUSTICE DEPARTMENT! REMEMBER, OPAQUE POLICIES AND GREED GOT US INTO THE CREDIT MESS. TRANSPARENCY IS GOOD! GREED IS NOT GOOD!!!!!!!!!!!!!!!!!!

October 05 2010 at 11:40 AM Report abuse -1 rate up rate down Reply
luvtopleaze

Of course it exists ..... Obama is expanding every potential government agency that can control its citizens. Where do you think the increase in employment is expected to come from ? You don't think it will come from the private sector do you ? The democrats are anti-business and will continue to hamper small business growth and expansion and continue to increase government employment. What knuckleheads !

October 05 2010 at 11:39 AM Report abuse rate up rate down Reply
HELLO JIM

You mean to tell me that the Anti-Trust Division of the Departmnt of Jusitce still exists? Didn't the Republicans under Newt Gingrich repeal it out of existence ten years ago?

October 05 2010 at 11:34 AM Report abuse -1 rate up rate down Reply