A class action lawsuit has been filed against American Express Company and American Express Travel Related Services Company, Inc. The lawsuit accuses these companies of imposing anti-competitive practices in the credit card market. The plaintiffs’ lawsuit is based on a combination of federal and state antitrust laws, state consumer protection statutes, and claims of unjust enrichment.
This week, a group of debit card users has achieved class certification in a lawsuit against American Express Co. The class, representing users from 11 states and the District of Columbia, alleges that American Express’s rules have indirectly inflated rival card costs.
What Is the American Express Lawsuit About?
The lawsuit, filed in the United States District Court for the Eastern District of New York, represents a collective action on behalf of millions of consumers and entities who have used electronic payment methods other than American Express cards. The plaintiffs allege that American Express’s Anti-Steering Rules in its merchant agreements have unreasonably restrained trade and inflated prices in the credit and charge card transaction market.
At the heart of the lawsuit against American Express are consumers who use credit and debit cards from networks like Visa, Mastercard, and Discover but not American Express. They claim that Amex’s anti-competitive rules have increased merchants’ rates, which are subsequently passed on to consumers across all forms of electronic payment.
Central to the plaintiffs’ argument is the claim that American Express’s Anti-Steering Rules have led to higher transaction costs, fewer credit card transactions, and, ultimately, increased prices for consumers across the United States. The lawsuit seeks damages, restitution, and injunctive relief for the alleged harms caused by these practices.
Two Classes of Plaintiffs (One Survives)
The plaintiffs sought to certify two classes in their lawsuit: one for credit card users and another for debit card users. They argued that American Express’s enforcement of anti-steering rules violated Section 1 of the Sherman Act, which prohibits trade-restraining agreements. The lawsuit targets transactions at 38 major merchants, including Target Corp., Albertsons Cos., and Publix Super Markets.
While the judge granted the debit card users class status, he denied it for the credit card user group. The denial was based on the plaintiffs’ failure to demonstrate that eliminating Amex’s anti-steering provisions would lead to reduced or stable annual fees for credit cards. According to the judge, the credit card class couldn’t prove an injury that could be demonstrated with common evidence, a hurdle the debit card class did not face.
This Has Been a Long Battle
This is not the first round of this battle. The U.S. District Court for the Eastern District of New York has previously upheld crucial findings against American Express regarding its Anti-Steering Rules. This decision, stemming from a rigorous seven-week bench trial conducted in July and August 2014 and concluded on February 19, 2015, underscores that this is another step in a larger battle in ongoing antitrust lawsuits facing major card companies.