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American Express Faces Class-Action Over Debit Card Overcharge Claims

 |  January 10, 2024

US District Judge Nicholas Garaufis certified a class of debit card users in nearly a dozen states, allowing them to pursue class-action claims against American Express.

According to Reuters, the claims allege that the credit card giant intentionally inflated merchants’ fees on transactions, resulting in consumers paying hundreds of millions of dollars in overcharges.

The certified class includes debit card users from states such as Illinois, Ohio, North Carolina, and the District of Columbia. However, the judge denied class action status for credit card users, citing the complexity introduced by credit card reward programs and other variables among potential class members.

The ruling is part of a long-standing legal battle over rules that restrict merchants from steering consumers towards specific cards for purchases, known as “steering.” The 59-page decision does not address the merits of the plaintiffs’ claims, leaving open the possibility that the case could be dismissed in the future.

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An expert for the plaintiffs estimated overcharge damages for the proposed debit-card class at more than $319 million as of March 2023. The consumers, who use Visa or Mastercard cards but not American Express, contend that the restrictions imposed by American Express on merchants led to higher prices at popular retailers such as Ikea, Target, CVS, and Dick’s Sporting Goods.

Reuters reported that American Express declined to comment on the judge’s decision.

Plaintiffs’ attorney Todd Seaver expressed gratitude for the court’s thorough decision. The legal battle has seen American Express challenging the reliability of the plaintiffs’ expert and questioning whether the named plaintiffs adequately represent the interests of the proposed classes.

Despite objections from American Express, Judge Garaufis concluded that they were not sufficient to undermine the debit card holders’ arguments for class certification.

The case, officially titled Oliver et al v. American Express, is ongoing in the U.S. District Court, Eastern District of New York, under the docket number 1:19-cv-00566-NGG-SJB.

Source: Reuters