Judge Rules in Favor of DOJ in American Express Case

Daniels Tredennick Financial, Accounting & Auditing 0 Comments

Judge Garafis

U.S. Judge Nicholas G. Garaufis of the Eastern District of New York wrote that American Express had created “an unlawful restraint on trade.”

Many news outlets including The New York Times, Bloomberg, and USA Today are reporting that after a seven-week trial U.S. Federal District Judge Garaufis ruled in favor of the DOJ in its claim that American Express violated U.S. anti-trust laws.  In the 150-page opinion, Garaufis wrote how American Express successfully pressured merchants into using its credit card despite being more expensive than other cards.

Merchants inability to encourage lower-cost forms of payment, Judge Garaufis wrote, creates “an environment in which there is nothing to offset credit card networks’ incentives — including American Express’s incentive — to charge merchants inflated prices for their services. This, in turn, results in higher costs to all consumers who purchase goods and services from these merchants.”

Merchants and Consumer Advocate Groups across the country expressed delight over the Garaufis’s decision.

The DOJ originally targeted Visa and MasterCard along with American Express over their policies blocking the merchants who accept their credit cards from steering customers toward cheaper payment methods.

But while the other two credit card giants agreed to change their policies in settlements inked before the suit was filed, American Express opted to fight the DOJ through a bench trial conducted over the summer of 2014.

Some legal experts speculate how Garaufis’s ruling makes it possible for merchants to seek reparations retroactively. In other words, merchants might be able to recoup overcharges of interchange fees going back 10-12 years. Developing….

The case is U.S. et al. v. American Express Co. et al., case number 1:10-cv-04496, in the U.S. District Court for the Eastern District of New York

Leave a Reply