The Anti-Steering Dispute
The most significant litigation concerned contractual rules preventing merchants who accept the card from encouraging customers to use a cheaper alternative. Because the card charges merchants higher fees than most competitors, those rules were challenged as restraining competition.
The counterargument, which ultimately prevailed at the Supreme Court, was that a payment card is a two-sided platform serving merchants and cardholders simultaneously, and that competitive effects must be assessed across both sides rather than on merchant fees alone.
Two-sided markets changed the analysis
The decision established that for platforms serving two interdependent groups, harm to one side is not sufficient. Higher merchant fees funding cardholder rewards can be procompetitive when the platform is assessed as a whole. That reasoning now shapes antitrust cases well beyond payment cards.
What This Means Practically
Merchant costs of card acceptance are embedded in retail prices generally, since merchants rarely price differently by payment method. That means the fee structure affects all customers, including those paying cash.
Surcharging rules vary by state and by card network agreement. Some states restrict surcharges, and networks impose their own conditions including disclosure requirements and caps.
Cardholder Claims
Separate consumer claims concern annual fee increases, changes to benefits during a card year, and how promotional interest terms convert. State consumer protection and contract law apply, and the cardholder agreement generally permits changes with notice.
Where a benefit that motivated the annual fee is withdrawn mid-term, that is the strongest form of cardholder claim, though agreements typically reserve broad rights to modify.
Read change-in-terms notices
Card issuers modify benefits and fees through change-in-terms notices that look like routine mail. They frequently contain the only advance warning of a benefit withdrawal or fee increase, and sometimes an option to reject changes by closing the account.
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American Express Lawsuits: Merchant Steering Rules and Cardholder Claims: Frequently Asked Questions
Answers to the most common questions about this case and your legal options.
What was the anti-steering case about?
Contract rules preventing merchants from encouraging customers toward cheaper cards, challenged as restraining competition given the higher merchant fees charged.
What is a two-sided market?
A platform serving two interdependent groups, here merchants and cardholders. Courts assess competitive effects across both sides rather than on merchant fees alone.
Do card fees affect cash customers?
Generally yes. Merchants rarely price differently by payment method, so acceptance costs are embedded in retail prices paid by everyone.
Can merchants add a surcharge?
It depends on state law and network rules. Some states restrict surcharges, and networks impose disclosure requirements and caps.
What are cardholder claims about?
Annual fee increases, benefits changed during a card year, and promotional interest conversion, though agreements typically reserve broad rights to modify with notice.
Legal Disclaimer
This article is general legal information, not legal advice, and does not create an attorney-client relationship. Case status, eligibility criteria, and any amounts described are as reported at the date shown and may change. Consult a licensed attorney in your jurisdiction about your own situation.