AmEx class action claims company prevents merchants from trying to lower swipe fees

American Express class action overview: 

• Who: Ten small businesses filed a class action lawsuit against American Express. 
• Why: AmEx swipe fees are higher than others, and its rules prohibit merchants from steering customers to cheaper options.
• Where: The American Express class action was filed in federal court in Rhode Island.

A group of small businesses filed a class action lawsuit against American Express (AmEx), claiming the company charges high swipe fees and its rules prevent merchants from steering customers to cheaper options.

The class consists of 5,155 merchants to whom American Express waived the right to compel arbitration.

For small businesses, swipe fees can be 3% of each transaction, according to the class action lawsuit.

“The toll is heaviest on small businesses with tight margins, such as grocery stores, local retailers and restaurants,” the American Express swipe fees class action says. “For many of these merchants, credit-card swipe fees eat up roughly half of what the small business owner can take home at the end of the month.”

AmEx swipe fee rules are last to stop merchants from steering customers

American Express enacted rules prohibiting merchants from steering customers to cheaper options, according to the class action lawsuit. These so-called non-discrimination provisions are allegedly an antitrust violation as they constrain a competitive environment.

The rules prohibit merchants from offering a lower price for using payment options with smaller fees. Visa and Mastercard dropped their non-discrimination provisions rules by 2013, making American Express the only major credit card company to still use them. 

“It is AmEx’s rules alone that prohibit U.S. merchants from using discounts, surcharges, verbal prompting, signage and other techniques to incentivize shoppers to use cheaper payment cards,” the class action says.

In March, Mastercard and a group of banks agreed to settle a lawsuit in which Amazon claimed the banks conspired to charge inflated transaction fees.

Do you use an American Express card when you shop? Let us know in the comments.

The plaintiffs are represented by Anthony Leone of Leone Law LLC; Deepak Gupta, Eric F. Citron and Thomas Scott-Railton of Gupta Wessler PLLC; Scott C. Harris, Dan K. Bryson and Peggy J. Wedgworth of Milberg Coleman Phillips Bryson Grossman PLLC; Tracey Kitzman of Song PC; and Robert W. Cohen of the Law Offices of Robert W. Cohen PC.

The AmEx class action lawsuit is 5-Star General Store aka Bento LLC, et al. v. American Express Co., et al., Case No. 1:24-cv-00106, in the U.S. District Court for the District of Rhode Island.

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