American Express lost a major court decision over its rules that prohibit merchants from telling customers they prefer to accept one card over another. AmEx previously said if the lose the case it will materially affect their business.
American Express agreed to settle two putative antitrust class actions filed by U.S. merchants that challenged the company’s Card acceptance agreements. The settlement agreement will address certain merchant concerns, while helping to ensure that American Express Card Members are treated fairly at the point of sale. It will also limit the Company’s exposure to future…
American Express agreed to settle two putative antitrust class actions filed by U.S. merchants that challenged the company’s Card acceptance agreements. The settlement agreement will address certain merchant concerns, while helping to ensure that American Express Card Members are treated fairly at the point of sale. It will also limit the Company’s exposure to future legal claims. The first lawsuit, In re American Express Anti-Steering Rules Antitrust Litigation, challenges the Non-Discrimination Provisions in the company’s merchant contracts. The lawsuit dates back to 2006 and is pending in the U.S. District Court for the Eastern District of New York. The second lawsuit, In re Marcus Corporation, challenges American Express’ Honor All Cards Provisions. This lawsuit dates back to 2004 and is pending in the U.S. District Court for the Southern District of New York. American Express will reimburse the class plaintiffs’ costs of notifying merchants of the settlement up to $2 million and will provide an additional $2 million fund for plaintiffs to communicate to merchants about the terms of the settlement.
An agreement has been reached with key conferees on the Wall Street reform bill regarding the Durbin amendment regulating interchange fees making minor, clarifying changes to the language which passed the Senate 64-33. The agreement addresses concerns raised by state governments regarding their use of payment cards distribution of government benefits. Modifications to the Durbin interchange amendment would regulate the interchange fees associated with debit or prepaid cards issued by large banks on behalf of government-administered payment programs; exempts federal, state and local government program debit and prepaid cards from interchange regulation; defines âinterchange transaction feeâ to include debit card fees that are established by a payment card network; and provides that the Fed cannot regulate network fees. The amendment would regulate the interchange fees associated with reloadable prepaid debit cards, which are exempted from interchange regulation in an attempt to protect the unbanked from being driven to payday lenders and other non-bank entities. It also provides card networks can no longer prevent merchants from offering customers a discount to use one card network vs. another and card networks cannot prevent merchants from offering a discount for one form of payment vs. another (cash vs. check vs. credit vs. debit). Additional provisions limit the ability to set maximums for payment by credit card to the Federal government and colleges and universities; does not change the existing prohibition in the operating rules of Visa and MasterCard against card issuer discrimination; and provided for regulatory authority under the amendment to migrate to the Consumer Financial Protection Agency/Bureau after the CFPA/B is established.