Justice Department Sues American Express
Credit Card Industry
Newscast Media –The US government is suing credit card giant American Express over claims of anti-competitive practices. The Justice Department says the company’s contracts with merchants prevent rivals form undercutting it on transaction charges. MasterCards and Visa were also sued by the government but both companies agreed to settle their cases.
The Justice Department said all three major credit card companies were impeding competition by preventing businesses from offering customers alternative and less expensive forms of payment. When merchants sign up with a major credit card provider, restaurant or shop owners must pay fees charged by that provider. Contracts also prevent merchants from offering customers the chance to pay with rival credit cards that could be cheaper, Attorney General Eric Holder said.
“Visa, MasterCard and American Express don’t just impose fees, they also prevent merchants from offering consumers any cost-saving options such as discounts or rewards for using less expensive forms of payment,” he said.
“The companies put merchants and consumers in a no-win situation: accept our card, pay our fees, and don’t even think about trying to get a discount.”
American Express contends it has no plans of settling the case.
“We have no intention of settling the case,” said Kenneth Chenault, American Express’s chief executive.
“We will defend the rights of our card members at the point of sale, and our own ability to negotiate freely with merchants.”
According to the Justice Department, credit card Credit card transaction fees are big business for the industry. The three big providers $35bn last year alone. http://newscastmedia.com/americanexpress.htm
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