Posted by Chuck on June 25, 2018
News

Published on June 25th, 2018 | by Chuck

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Supreme Court Rules in Favor of American Express who Prohibits Retailers from ‘Steering’ Customers

The Supreme Court sided today with American Express in a 5-4 ruling, allowing Amex to retain a clause in their contract with retailers to prohibit them from ‘steering’ a customer away from an Amex card to a Visa or Mastercard. Justices Roberts, Kennedy, Alito, and Gorsuch joined Justice Thomas in the majority opinion.

PDF of the decision can be found here.

American Express has traditionally charged businesses more in swipe fees than do Visa or Mastercard (though they’ve been getting more competitive on the fees recently), ostensibly to help fund their richer rewards programs. Because of that, some retail shops might attempt to steer customers away from using Amex. To combat this, Amex has a provision in the agreement requiring businesses who accept their payments to avoid this steering practice.

More than a dozen states brought the lawsuit against American Express for this policy claiming it violated anti-trust laws. The conservative judges ruled in favor of American Express stating that the Amex policy has not been demonstrated to be stifling competition.

Justice Breyer wrote a dissent with the opinion that American Express’s card consumer-faced card issuing business is separate from their payment network business, and that the burden of the cost required from the consumer end can not affect their payment network business with it’s swipe fees.

For most of us in the miles-and-points hobby this decision is a positive one since we don’t own retail businesses but we do use Amex cards with rewards, and we want Amex to keep up those reward levels which possibly could have lessened a bit in the long run had they lost the case.

On a broader point, WSJ notes that this decision is a setback for the merchants’ broader ambitions to take on credit card swipe-fees, and enforce limits similar to those of debit cards. If such legislation is ever passed, it would obviously decimate the credit card rewards programs.

 



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Joe
Joe

Big sigh of relief for us mile collectors, but tears of anguish for the long term economic well being of general consumers with banks and payment networks continued dominace and toll collection on every transaction.

ShareTheLove
ShareTheLove

Cash anyone ?

CryptoLord666
CryptoLord666

Crypto anyone?

Ben
Ben

Hahahahahaha! good one!

Max
Max

Sigh it’s a misconception that cash is cheaper for merchants to handle.

guy bucktastik
guy bucktastik

Cash revenue is easier to avoid taxes on, albeit fraudulently.

guy bucktastik
guy bucktastik

Bitcoin!

Frogger
Frogger

Bitcoin fees are higher than Amex and who has a minimum of 10 minutes for a transaction to go through. ?

Orin
Orin

Etheruem or ripple are fast and very low fee even over international boarders

Frank
Frank

Seems like a logical one to me. You want to take Amex then you need to abide by their terms. Can’t claim it’s antitrust since you don’t have to use them. Even if you felt like it was an antitrust problem then you should take issue with amex’s (supposed) dominance and not specific terms the agreement

W
W

This is where I stand. Nothing requires you to take amex. If you want amex you’re signing up for the higher fees

Sam
Sam

think the title is misleading… retailers can steer customers all they want. they just can’t sign a contract with amex saying they wont and then claim that they have a constitutional right not to abide by that term of the contract

Outlook
Outlook

Ohio is not even a retailer. The plaintiffs were saying that Amex’s steering provision violated antitrust law. Nobody was quibbling over whether or not retailers have a constitutional right to not abide by that provision. They were disputing whether that provision itself is legal or not.

J.C.
J.C.

If you don’t sign their contract, you cannot accept their cards. End result is the same.

Andrew
Andrew

Retailers can tell Amex to shove it and not accept their cards for payment. Frankly, I think this has been the case with some retailers, and I’m a little surprised Amex would pursue this and risk the wrath of angry businesses.

MSer
MSer

As much as I like Amex perks, I think this SCOTUS decision is horrible. Average Joe cardholder gets ripped off with high fees and meager benefits.

AL
AL

No, the person paying cash gets ripped off by subsidizing the card holder.

Sam
Sam

kinda odd to say the SCOTUS decision is horrible while holding an Amex card. if you think Amex anti-steering and high fees are reprehensible, then your anger should be directed there.

Zach Carpenter
Zach Carpenter

The answer is to use bitcoin.

Orin
Orin

We need etheruem or ripple or any of the other various alt coins to be developed with a debit card attached to them on the visa network

John
John

I look for more small businesses to just stop accepting Amex altogether. This is already the case at many businesses in my area, as I learned from trying to use my Amex cards on Small Business Saturday (back when amex actually paid you $10/$25 to do so)

JF
JF

The founder of Plastiq had an AMA a while back on reddit, and I found it interesting that he said all AmEx cards have the same swipe fees while Visa & MC have tiers.

People can complain about AmEx having higher swipe fees, but I think at least a fixed rate is something a business owner can plan for as opposed to taking all Visa’s and finding out later you’re paying a premium rate for accepting that Visa Infinite. To each his own I guess.

MickeyMouse
MickeyMouse

If merchants don’t want to accept Amex they don’t have to I’ve never been “steered” away from using Amex. The only one I’ve had trouble with is Discover especially during the 5% categories I go to merchants and they say they don’t accept Discover but do accept Amex.

Frogger
Frogger

That’s because big spenders and corporations use Amex. Discover is used by lower income groups.

Hans
Hans

Just got an email from American Express to refer friends. Spend 1000 to earn 250, blue cash everyday.

TruthSpeaker
TruthSpeaker

I’d honestly rather not have the rewards than to continue having big banks and credit card companies enslaving us with fees and misleading contracts

Parkerthon
Parkerthon

Crypto advocates need to get a grip. So many problems with using any specific crypto as a currency, I don’t even know where to begin. Not that block chain doesn’t have potential someday in payments… it’s just not there yet. Sorry if you bought the BS and planned on early retirement as a crypto miner/investor.

As for fees, I don’t see Ohio expected to win this case as the action put forth by this monopoly are not clearly hurting all consumers nor is it forced in any way. It also let SCOTUS set a dumb, can of worms, precedent by now stating legal harm had to be proven on both sides of a market if its to be deemed anti-trust worthy.

My understanding is laws actually exist today that prohibit businesses from charging fees for credit card use. If we really want to solve the issue of credit card fees being burdensome on businesses, we would go the route of Europe and give up subsidized CC benefits. Personally I’m not entirely against that idea given how restrictive new card bonuses have become anymore.

Ann
Ann

On top of everything else, Bitcoin uses hundreds of thousands of times more energy per transaction than our current credit/debit system does. Imagine if cars went from getting 30mpg to 0.00006mpg, lol.

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