Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

AmEx Loses Bid to Dismiss Foreign Exchange Fee Suit

American Express credit cards are arranged for a photograph in New York. Photographer: Andrew Harrer/Bloomberg
American Express credit cards are arranged for a photograph in New York. Photographer: Andrew Harrer/Bloomberg

March 29 (Bloomberg) -- American Express Co., the world’s biggest credit-card issuer by purchases, must face a class-action lawsuit accusing it of conspiring to fix foreign currency conversion fees.

U.S. District Judge William Pauley in New York today rejected a bid by AmEx to dismiss the group lawsuit originally filed in 2004. He said AmEx had failed to provide documentation to support its defense.

“That Amex cannot pinpoint the precise date of its decision to implement a foreign exchange fee is arresting,” Pauley said in his ruling. “The lack of internal company documentation raises suspicion.”

The plaintiffs, holders of Visa or MasterCard credit cards issued by more than a dozen banks including Citigroup Inc. and Bank of America Corp., allege that AmEx engaged in a price-fixing conspiracy with banks and also conspired to include compulsory arbitration clauses in cardholder agreements.

The plaintiffs said the price-fixing scheme began when AmEx met with representatives of other banks in May 1999, Pauley said in his decision. After the meeting, Amex raised its foreign exchange conversion fee to 2 percent from 1 percent, and some other banks also raised their fees, according to the ruling.

Lacked Standing

AmEx argued there was no evidence that the fee increases resulted from a conspiracy involving the New York-based company, according to the ruling. AmEx also said the plaintiffs lacked standing under the arbitration clause to bring a conspiracy claim because they couldn’t demonstrate a “threatened loss.”

While “the plaintiffs are not AmEx cardholders, they nevertheless suffered reduced choice in the marketplace as a result of AmEx’s alleged collusion with the banks,” Pauley said in his ruling.

“A jury could find that AmEx’s conduct caused injury to competition in the credit card market,” the judge said.

“We are disappointed by the court’s decision,” Joanna Lambert, an AmEx spokeswoman, said in an e-mailed statement. “While we don’t comment on the specifics of pending litigation, we do note that the judge’s decision makes no findings other than the plaintiff may proceed with its case. We intend to continue to vigorously defend the case.”

The case is Ross v. American Express Co., 04-cv-05723, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.