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Amex, Visa, Mastercard Sued Over Anti-Competitive Rules
WASHINGTON — The US Justice System announced today that it filed a civil antitrust lawsuit in U.S. District Court for the Eastern District of New York challenging rules that American Express, MasterCard and Visa have in place that prevent merchants from offering consumers discounts, rewards and information about card costs, ultimately resulting in consumers paying more for their purchases. The lawsuit joins the states of Connecticut, Iowa, Maryland, Michigan, Missouri, Ohio and Texas in this case.
According to the complaint, American Express, MasterCard and Visa maintain rules that prohibit merchants from encouraging consumers to use lower-cost payment methods when making purchases. For example, the rules prohibit merchants from offering discounts or other incentives to consumers in order to encourage them to pay with credit cards that cost the merchant less to accept.
“With today’s lawsuit we are sending a clear message: We will not tolerate anticompetitive practices,” said Attorney General Eric Holder. “We want to put more money in consumers’ pockets, and by eliminating credit card companies’ anticompetitive rules, we will accomplish that.”
These restrictive rules restrain competition among credit card networks for merchant acceptance and distort the competitive process. The proposed settlement with MasterCard and Visa is an important step in bringing more credit card competition to the point of sale. The proposed settlement allows any merchant that only accepts Visa and MasterCard to take advantage of the relief immediately.
The proposed settlement requires MasterCard and Visa to allow their merchants to:
- Offer consumers an immediate discount or rebate or a free or discounted product or service for using a particular credit card network, low-cost card within that network or other form of payment;
- Express a preference for the use of a particular credit card network, low-cost card within that network or other form of payment;
- Promote a particular credit card network, low-cost card within that network or other form of payment through posted information or other communications to consumers;
- Communicate to consumers the cost incurred by the merchant when a consumer uses a particular credit card network, type of card within that network, or other form of payment.
Credit card acceptance costs U.S. merchants approximately $35 billion each year. Those costs are collected from merchants in the form of a “swipe fee” they pay every time a credit card is used. American Express has the highest merchant fees of any credit card network. Merchants pass on these billions of dollars in fees to all their consumers in the form of higher retail prices.
The ongoing litigation against American Express seeks to allow merchants that accept American Express to engage in the same kind of discounting and encouragement that the proposed settlement with MasterCard and Visa allows. Until American Express’s restraints on merchants are lifted, the US will continue to fight for consumer rights and fair competition in the credit card industry.
Key Facts
- State: New York
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release ↗
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