WASHINGTON–The Retail Litigation Center and the National Retail Federation said they have asked the full 2nd U.S. Circuit Court of Appeals to take up a lawsuit over American Express rules that keep retailers from encouraging customers to use other cards with lower processing fees.
The two organizations allege the rules are an antitrust violation and have made it difficult for merchants to win lower fees from any of the nation’s major credit card companies.
“While intense competition is a hallmark of the retail industry, it is largely absent from the credit card market where fees continue to skyrocket,” said RLC President Deborah White, in a statement. “American Express stifles competition by imposing rules that deny merchants the ability to incentivize customers to use lower cost cards, and by doing so increases costs for all customers. Consumers should have visibility into the cost of transactions and the opportunity to take action to limit them if they so choose.”
“High swipe fees charged to retailers for processing credit card transactions drive up the prices consumers pay for merchandise every day,” added NRF Senior Vice President and General Counsel Mallory Duncan in a statement. “All swipe fees are too high, but American Express fees are among the highest. That’s their choice, but they should not be allowed to stand in the way of retailers simply asking their customers if they have another card. It’s ultimately American consumers who lose when credit card companies refuse to compete like any other business.”
The Retail Litigation Center and the National Retail Federation noted that Amex, Visa and MasterCard all used to have rules prohibiting merchants from encouraging customers to use lower-fee credit cards, but Visa and MasterCard dropped the restriction in a 2010 settlement with the Justice Department.
American Express, however, declined to drop the restriction and was sued by the Justice Department. A U.S. District Court judge ruled in February 2015 that the Amex rules were a violation of federal antitrust law, but Amex appealed and a three-judge panel of the 2nd Circuit ruled in its favor this September. The Justice Department is now asking the full court to hear the case, and both RLC and NRF on Monday filed a friend-of-the-court brief in support of that request.
The brief alleges that retailers who have dropped American Express have seen unacceptable sales losses, showing the company’s market power in the credit card industry. “And its high swipe fees coupled with the rule against steering customers to competing cards has left other card brands with little incentive to lower their own swipe fees,” the organizations said.