On Thursday, a New York federal judge indicated that he would give preliminary approval to a class action settlement that would resolve two class action lawsuits over American Express Co.’s allegedly anticompetitive credit card rules.
If approved, the American Express class action settlement would put an end to two separate class action lawsuits filed by a group of merchants who are challenging AmEx’s “honor all cards” rule and its merchant surcharge rule. If approved, the AmEx merchant fee settlement would give merchants the ability to charge customers who pay with a credit card an extra fee, as long as the fee is applied to all credit cards accepted by the merchant.
Although the American Express merchant fee class action settlement does not require AmEx to provide a monetary benefit to the merchant class, the merchants will benefit from the ability to pass on the fee to its consumers. The AmEx merchant fee settlement also requires AmEx to pay as much as $75 million in attorneys’ fees and $4 million for notice and communication costs.
Merchants have always been allowed to add a surcharge for credit card transactions under AmEx’s credit card rules. However, Amex required merchants who accept AmEx to apply the same surcharge to all credit and debit cards they accept, even though debit cards are cheaper to process due to federal regulations. Under the terms of the proposed class action settlement, merchants who accept AmEx will be able to encourage the use of debit cards by imposing a surcharge on credit card transactions.
The AmEx merchant fee class action settlement was initially reached in December 2013. If approved, the class action settlement would prohibit merchants from challenging AmEx’s rules for at least 10 years after the changes are implemented.
Although merchants will still be able to bring claims for damages, their claims must adhere to the terms of their agreements with AmEx, many of which limit merchants to arbitration as a remedy and waive their rights to file or join a class action lawsuit. This policy was upheld last year in a monumental decision by the U.S. Supreme Court.
The AmEx merchant fee settlement was reached shortly after the approval of a landmark $7.25 billion class action settlement in a similar action against Visa Inc. and MasterCard Inc. That class action settlement does provide a cash recovery in excess of $7 billion to the merchant Class Members and also requires Visa and MasterCard to lower their swipe fees for eight months.
Top Class Actions will update our readers when claim filing instructions for the American Express Merchant Fee Class Action Settlement are available.
The plaintiffs are represented by Reinhardt Wendorf & Blanchfield, Friedman Law Group LLP and Patton Boggs LLP.
The AmEx Merchant Fee Class Action Lawsuits are American Express Anti-Steering Rules Antitrust Litigation (NO II), Case No. 1:11-md-02221, and The Marcus Corp. v. American Express Co., et al., Case No. 1:13-cv-07355, both in the U.S. District Court for the Eastern District of New York.
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