ADVERTISING DISCLOSURE: is an independent, advertising-supported web site. receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Six states including missouri joining the lawsuit

Six states including missouri joining the lawsuit

October 15, 2010 | Updated on October 15, 2010
Add to Favorites:
The content is accurate at the time of publication and is subject to change.

The antitrust lawsuit filed against Visa and MasterCard for charging unreasonable fees to merchants just got stronger with six states including Missouri, joining hands with the United States Justice Department. This civil lawsuit alleges that these banks are subjecting merchants to anti-competitive rules that are considered unfair and unlawful.

As per the terms mentioned in the lawsuit, the credit card companies forcibly elicited consent from the merchants and made them sign on forms that specified that the merchants would lure customers into using certain types of credit cards that had high fees associated to them. The agreement signed by the merchants with the bank also stipulated that the merchants would not ask the consumers to opt for cheaper payment options.

Though a settlement has now been reached between the Justice Department of the United States and MasterCard and Visa, the court approval is being awaited. As per the rules of the settlement reached, banks will remove clauses in their agreements that stipulate that merchants should not reveal the transaction charges to consumers. Chris Koster, an attorney general from Missouri also mentioned that the new rules also give permission to the merchants to request consumers to pay for their goods or services using cards that charge lower fees.

While Visa and MasterCard have given their approval for this new settlement, American Express has not accepted it. This implies that the litigation against American Express will still remain open. Kenneth Chenault, the CEO and Chairman of American Express clearly mentioned that his company does not have any intention of settling this case any time soon. American Express is one of the credit card lenders whose fees are extremely high as compared to the other banks.

Koster said that each time a consumer paid for his purchase using the credit card, the merchant who owned the business has to pay "swipe fees" to the bank. In order to make good for these charges, the merchants had to levy extra charges on consumers. This led to merchants and customers undergoing loss. The highest swipe fees are being levied by American Express followed by Visa and MasterCard. Each year, these banks make profits to the tune of $35 million just through these fees.

Despite knowing the truth behind the usage of credit cards for purchases, merchants could not reveal it to the consumers because of the agreement they signed with the banks.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!