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The Supreme Court has ruled that American Express can force restaurants, dry cleaners and other businesses to agree that they won't try to get their customers to pay with other credit cards. American Express is historically known for charging retailers higher fees to use their cards. The court was divided, but more conservative justices won out in a 5 to 4 vote. NPR's Chris Arnold has more.
CHRIS ARNOLD, BYLINE: Let's say you get the check at your local favorite restaurant, and you go to pay with American Express. If the waitress or the owner says, hey, you know, if you could pay with a different type of card that would really help us out because Amex charges us higher fees, you might say, sure, no problem; I'd be happy to do that. But American Express makes retailers sign an agreement saying that they promise not to steer customers towards other credit cards.
STEPHANIE MARTZ: The market is not functioning right because the consumers don't have this kind of information.
ARNOLD: That's Stephanie Martz, a top lawyer at the National Retail Federation. She argues that American Express is using its leverage on store owners in an unfair way and not allowing customers to make informed choices.
MARTZ: And the result is that there's no downward pressure on the fees that merchants have to pay for the credit cards. It has hampered competition and resulted in higher fees for the cards all around.
ARNOLD: And Martz says that results in retailers passing along those higher costs to customers so everybody pays more and American Express makes more money. More than a dozen states around the country agreed that this was a problem, and they brought an antitrust lawsuit against American Express. The case made its way all the way to the Supreme Court.
But today the court sided with the company. Justice Clarence Thomas wrote for the majority saying, quote, "the plaintiffs offered no evidence that the price of credit card transactions was higher than the price one would expect to find in a competitive market." But while the court may not be convinced, many consumer groups are. Michael Landis is with the U.S. Public Interest Research Group.
MICHAEL LANDIS: Today's decision from the United States Supreme Court means that consumers across the United States will continue to pay artificially inflated prices for basic goods and services.
ARNOLD: For its part, American Express said in a statement that the decision is a major victory for consumers and American Express. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.
