American Express faces US lawsuit

American Express credit card American Express says it is "defending the rights of card members"

Related Stories

Credit-card company American Express is being sued by the US government over claims of anti-competitive practices.

The Justice Department says the company's contracts with merchants prevent rivals from undercutting it on transaction charges.

The government also sued credit-card giants MasterCard and Visa, but both firms agreed to settle their cases.

American Express has not settled, and said it would fight the charges.

At a press conference, the Justice Department said all three major card companies were stifling competition by stopping businesses from offering customers alternative cheaper forms of payment.

Start Quote

The companies put merchants and consumers in a no-win situation”

End Quote Attorney General Eric Holder US Justice Department

When they sign up with a major credit card provider, restaurant or shop owners must pay fees charged by that provider.

But 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."

In settling their cases, Visa and MasterCard agreed not to prevent merchants from offering discounts on rival cards.

But American Express rejected the idea that its agreements with merchants were anti-competitive.

"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."

Credit card transaction fees are big business for the industry. According to the Justice Department they earned the three big providers $35bn last year alone.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories


Features & Analysis

Elsewhere on the BBC

  • Woman standingMysterious miracle

    It's extremely unusual and shouldn't give false hope, but what makes the body beat cancer on its own?


  • A cyborg cockroachClick Watch

    The cyborg cockroach - why has a computer been attached to this insect’s nervous system?

Try our new site and tell us what you think. Learn more
Take me there

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.