Justice Department Sends Lawsuits To American Express, Visa And Master CardOctober 5th, 2010 - 7:38 pm ICT by GD
By Gina Gomez
American Express, Visa and Master Card have been sued by the United States Justice Department on the ground of anticompetitive policies. The three credit card companies have been accused of having rules and regulations that prevent merchants from encouraging the consumers to use cheaper credit cards. The process results in consumers paying more for their purchases. A proposal of settlement has been filed simultaneously with Visa and Master Card. The proposal pending court approval will result in the two credit card companies allowing the merchants to offer discounts and incentives to their consumers. The proposal will enable merchants to provide relevant information to their consumers and encourage the use of less expensive methods of payment.
American Express is not ready for any settlement and said that the lawsuit will have an adverse affect on the consumers by limiting their use of American Express card. The lawsuit is having a negative impact on the company’s business with American Express shares being down by 6.5%. A former executive of the company said in an email statement that the lawsuit was problematic for the company. The exact impact on the company’s finances on losing the lawsuit is yet to be known.
The United States Justice Department said that they aim at putting more money in the pocket of the consumers. The Justice Department revealed that the merchants have to pay a “swipe fee” when a credit card is used, the fees then is passed on to the consumers in the form of higher retail prices. American Express is said to be charging the merchants more than any other credit card company.
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Tags: american express, american express card, consumers, court approval, credit card companies, credit card company, credit cards, exact impact, gina gomez, incentives, lawsuits, Master Card, merchants, money in the pocket, negative impact, proposal, retail prices, swipe, united states justice department, visa