San Francisco City Attorney Dennis Herrera has brought a
statewide consumer protection action lawsuit against American Express, alleging
anticompetitive and illegal antisteering merchant agreements.
The civil suit, filed Nov. 6 with the Superior Court of San
Francisco, claims Amex owes merchants billions of dollars under California’s
Unfair Competition Law, which authorizes civil penalties of $2,500 for each
violation. Herrera argues that each card transaction is one violation. “The
party is over for American Express, and the bill is coming due in California,”
he said in a statement.
The suit follows a judge’s February ruling
that found that Amex’s merchant agreements violated federal antitrust laws and gave
Amex 30
days from May 1 to drop antisteering provisions that prohibited merchants
from steering consumers to preferred or less expensive payment methods. Amex is
appealing the decision.
“The federal court ruling earlier this year merely confirms
what millions of retailers, economists and U.S. Justice Department officials
have known for years: American Express has rigged the game,” Herrera said.
“They shook down merchants, stifled competition and shifted courts for their
extravagant member perks. … Sellers’ uniform pricing mandates effectively
forced all consumers to subsidize the high fees and generous rewards American
Express continues to lavish on its generally affluent cardholders.”
The card network plans to fight California’s allegations.
“We don’t believe the suit has merit. We plan to defend it vigorously,” said an
Amex spokesperson in an email to BTN.
Amex’s third-quarter corporate card-billed volume declined
3 percent year over year, owing to lower airline spend and lower average
transaction sizes in the United States.