American Express Faces Class-Action Lawsuit on Rules for Merchants 

Debit card users in nearly a dozen states have been granted the ability to pursue class-action claims against American Express. 

This follows a Tuesday (Jan. 9) ruling by U.S. District Judge Nicholas Garaufis, Reuters reported Wednesday (Jan. 10). 

The lawsuit accuses the company of driving up merchants’ fees on transactions, resulting in consumers paying hundreds of millions of dollars in overcharges, according to the report. 

Reached by PYMNTS, an American Express spokesperson declined to comment on the report.

While credit card users were denied class-action status, this ruling is the latest development in the ongoing litigation over rules that restrict merchants from “steering,” or encouraging consumers to use certain cards, according to the report. 

The class certified by Garaufis includes debit card users from Illinois, Ohio, North Carolina and other states, as well as the District of Columbia, the report said. 

The plaintiffs contend that American Express’ alleged restraints on merchants accepting its cards led to higher prices for consumers at popular retailers such as Ikea, Target, CVS and Dick’s Sporting Goods, per the report. 

The lawsuit claims that these restrictions caused consumers to pay inflated prices, resulting in overcharges amounting to more than $319 million, according to the report. 

While debit card users were granted class-action status, credit card users were denied the same status, the report said. Garaufis determined that the inclusion of credit card reward programs and other variables introduced too many differences among potential class members. 

The judge’s ruling did not address the merits of the plaintiffs’ claims, leaving the possibility of future dismissal, per the report. 

In another recent development around claims of steering, a class-action lawsuit was filed against PayPal in October, alleging that the company engaged in anti-competitive practices that resulted in higher prices for consumers during eCommerce transactions. 

The lawsuit claimed that the anti-steering rules of the eCommerce payment supplier and owner of Venmo stifled competition and prevented merchants from discounting products purchased with lower-cost payment options. 

Reached for comment by PYMNTS at the time, a PayPal spokesperson provided a statement: “PayPal continues to put our customers first in everything that we do, and we take this responsibility seriously.”