| NEW YORK
NEW YORK Dec 19 American Express Co has
agreed to let merchants charge extra for transactions paid with
the company's credit and charge cards, in a legal settlement
that its proponents said could change consumer spending habits.
The settlement resolves two class actions filed by merchants
that have been pending for several years.
In court papers filed on Thursday, lawyers for the merchants
wrote that the settlement represents "some of the most
consequential relief ever obtained in a private enforcement
action under the U.S. antitrust laws."
Businesses have long complained about the rising costs
associated with accepting credit and charge cards that help pay
for cardholder rewards.
"The old rules forced consumers using cash, debit and even
electronic benefits cards to subsidize the high swipe fees that
credit card companies charge to pay for rewards," Gary Friedman,
an attorney for merchants, said in a statement.
The ability to surcharge transactions paid by those cards
will give merchants more power to control those costs by
encouraging consumers to use cheaper forms of payment, like
debit cards, Friedman said.
American Express managing counsel Tim Heine suggested that
some merchants would not take advantage of the ability to
"While the modification of our contract provisions gives
merchants some additional flexibility, many merchants continue
to believe, as we do, that surcharging is fundamentally
anti-consumer," Heine said in a statement. "Few merchants have
taken advantage of earlier opportunities to surcharge out of
concern that it could risk alienating customers, and drive them
to patronize competitors who do not surcharge."
As part of the legal settlement, which must receive court
approval, American Express said it had agreed to pay up to $75
million in attorneys' fees for both cases.
The agreement comes after a federal district court judge in
Brooklyn last week approved an estimated $5.7 billion class
action settlement brought by merchants against Visa Inc and
MasterCard Inc challenging their rules.
As part of that settlement, merchants also won the right to
surcharge customers who use MasterCard and Visa credit cards in