U.S. Supreme Court to Consider American Express Card Fee Case

WASHINGTON, D.C. — A case challenging American Express' rules that prevent retailers from offering consumers benefits for using lower-fee credit cards is heading to the U.S. Supreme Court.

Retailers have alleged the financial company's rules violate antitrust regulations by denying consumers information about credit cards and by preventing them from taking advantage of benefits that retailers might offer in the absence of those rules, according to the Retail Litigation Center (RLC).

"The growing chorus of skepticism from the high court is an important signal that the lower courts should exercise vigilant oversight of the practices that credit card companies adopted to increase their profits at the expense of healthy competition," said Deborah White, president of RLC.

In July, RLC filed an amicus brief in support of a petition for the court to review a Second Circuit decision that keeps in place Amex's rules preventing retailers from offering benefits to consumers who choose to use cards with lower processing fees, as Convenience Store News previously reported.

The Second Circuit's decision reversed the trial court's ruling that Amex's conduct violates the Sherman Act.

"While intense competition is a hallmark of the retail industry, it is largely absent from the credit card market where fees continue to skyrocket. These fees — largely hidden from the consumer — are among the highest costs of doing business for America's retailers," White said.

"Retailers should have the right to educate consumers about credit card fees and their impact on prices and other benefits," she added. "Transparency will empower consumers to make choices that provide them with the greatest value when using a credit card."

According to White, the RLC will provide the Supreme Court with the retail industry's perspective on this issue when the court considers the merits of this case later in the term.

As The Associated Press reported, the case comes from a lawsuit filed by 11 states and the Obama administration in 2010 against three major financial companies — American Express, Mastercard and Visa. That lawsuit said letting merchants steer customers to cards with lower fees for merchants, or to other preferred cards, would benefit consumers and increase incentives for networks to reduce card fees.

Visa and MasterCard entered into consent judgments in 2011 and stopped their anti-steering rules for merchants; American Express went to trial.

A trial judge ruled against American Express in 2015, but the appeals court reversed that ruling last year.

The Trump administration has said it agrees with the states that argue American Express violated antitrust laws, but still urged the Supreme Court to reject the case. The administration said the justices should let the issue percolate in the lower courts, the AP reported.