SAN FRANCISCO, Nov. 19, 2015 /PRNewswire-USNewswire/ -- San
Francisco City Attorney Dennis
Herrera is suing American Express Company (NYSE: AXP) in a
statewide consumer protection action over anti-competitive and
illegal merchant restraints alleged to be "responsible for billions
of dollars in excessive and improper costs" borne directly by
retailers and, indirectly, by all California consumers.
Herrera's civil suit follows a federal court decision from
earlier this year, in which the U.S. Justice Department and 17
state attorneys general prevailed in their case that restrictions
long imposed by the global charge card giant on participating
merchants unlawfully restrained trade and violated federal
antitrust laws. As a result, Herrera's suit alleges, Amex
owes billions in civil penalties and restitution to merchants in
the nation's largest state under California's tough Unfair Competition Law.
"The party is over for American Express, and the bill is coming
due in California," Herrera
said. "The federal court ruling earlier this year merely
confirms what millions of retailers, economists and U.S. Justice
Department officials have known for years: American Express has
rigged the game. They shook down merchants, stifled
competition, and shifted costs for their extravagant member perks
to even cash-paying consumers. It's unfair, it's illegal,
and—under state law—it warrants tough penalties and restitution for
California's merchants."
American Express for years has exacted a 3 percent fee on each
charge card transaction—well in excess of fees charged such
competitors as Visa and MasterCard—accounting for roughly
$2.25 billion in fee payments
annually by California merchants
alone. At the same time, according to Herrera's complaint,
Amex strictly prohibited its participating merchants from taking
any step to encourage consumers' use of less costly payment
methods, including cash. Barred from assessing surcharges or
offering discounts—or even expressing a simple preference for cash
or competing cards—sellers' uniform pricing mandates effectively
forced all consumers to subsidize the high fees and generous
rewards American Express continues to lavish on its generally
affluent cardholders.
Herrera's complaint, filed in San Francisco Superior Court on
Nov. 6, seeks a judicial declaration
that Amex's merchant restraints violate California law together with an injunction
barring the company from enforcing its illegal contractual
provisions. California's
Unfair Competition Law authorizes civil penalties of $2,500 for each violation, which Herrera contends
equates to each charge card transaction. The complaint also
seeks restitution for California
merchants in an amount to be determined at trial as well as
attorneys' fees and costs of the suit.
The case is: People of the State of
California, ex rel. Dennis
Herrera v. American Express Company et al., San
Francisco Superior Court Case No. CGC-15-548854, filed Nov. 6, 2015. Documentation on the case is
available on the San Francisco
City Attorney's website at http://www.sfcityattorney.org.
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SOURCE San Francisco City
Attorney Dennis Herrera