American Express Must Face Class Action Lawsuit, US Judge Rules

Rhode Island federal judge has ruled that American Express will not be able to block a class action lawsuit filed by small merchants, who allege that the company overcharged them for credit and debit card transaction fees in violation of U.S. antitrust law.

In a decision made earlier this week, U.S. District Judge Mary McElroy rejected American Express’s attempt to force the merchants to pursue their claims individually rather than as a collective class. The lawsuit, initially filed in March, involves ten small businesses accusing the financial giant of enforcing “non-discrimination provisions” that prevent merchants from steering customers toward payment methods that charge lower transaction fees.

The plaintiffs contend that these provisions unfairly inflate the cost of credit card payments for businesses, thus violating antitrust laws designed to promote fair competition. The merchants are seeking a formal declaration that American Express’s practices constitute an illegal restraint of trade.

American Express, which did not respond to a request for comment on the ruling, had previously sought to have the case handled on an individual basis, arguing that the claims were too varied for a class action. However, Judge McElroy’s decision ensures that the merchants will have the opportunity to pursue the case collectively.

Attorneys representing the plaintiffs expressed satisfaction with the court’s ruling. In a statement, they emphasized that the decision would allow small businesses to bring their case to court, after struggling to resolve the issue through arbitration. More than 5,000 merchants had previously sought to arbitrate their claims against American Express, but the process was halted when the company declined to pay over $17 million in filing fees for the mass arbitration. The arbitrator subsequently closed the proceeding due to the nonpayment, as noted by Judge McElroy in her ruling.

Source: Economic Times