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Rhode Island Federal Court: Ten merchant plaintiffs filed a proposed class action against American Express (AmEx), alleging the company violated federal antitrust laws by restricting businesses from implementing measures to lower credit card swipe costs.

Merchants Hit AmEx With Antitrust Claims : Allegations Against AmEx

The complaint, filed Thursday, accuses AmEx of breaching the Sherman Act through its non-discrimination provisions. These rules prevent merchants from encouraging customers to use cards with lower transaction fees, effectively stifling price competition among credit card networks in the U.S. payment processing market.

Seeking Representation

The co-plaintiffs, representing businesses across California, Florida, and Texas, aim to represent a class of 5,155 merchants exempt from arbitration agreements with AmEx.

Impact on Merchants

Small merchants in the U.S. contend they face fees of at least 3% on each credit card sale, significantly impacting their profits. The plaintiffs argue that AmEx swipe fees are notably higher than those for debit card transactions, sometimes doubling the cost.

Merchants Hit AmEx With Antitrust Claims : Winds of Change

The lawsuit highlights recent industry reforms initiated by private merchant litigation and antitrust enforcement, leading to the relaxation of rules by Visa and Mastercard. However, the plaintiffs assert that AmEx alone continues to prevent U.S. merchants from employing techniques to incentivize the use of cheaper payment cards.

Legal Maneuvers

Despite AmEx's binding arbitration requirements, the merchants argue that the company's actions have waived its right to compel arbitration under federal laws and common law waiver principles.