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AmEx limiting your card choices? Judge weighs in on that

If you're a longtime credit card user, you've probably experienced this before: When you pull out Card B instead of Card A, you're told by a store clerk that only Card A is accepted. Then, when you reverse that strategy at another retail business, Card A is rejected.

This one-over-the-other merchant response has been commonplace in the American marketplace for a very long time. It is commonly known as "steering," given that it pushes consumers in one card direction.

In fact, steering is seldom a behavior that merchants author of their own volition and seek to practice in their businesses. Rather, it is ordered by card issuers that seek a monopoly in card use at the retail establishments that accept their cards.

Visa and MasterCard settled anti-steering lawsuits with a number of state governments in 2011.

Now American Express is on the receiving end of some judicial wrath for its anti-steering activities intended to bar merchants from recommending lower-cost options to customers.

AmEx charges more for card use than do many other card issuers, stating that its spiked processing fees are merited by the "premium" services it provides.

A federal judge ruled earlier this month that the fees and the blocking of rivals' participation harm competition and thus violate American antitrust law.

U.S. Attorney General Eric Holder called the ruling "a triumph for fair competition."

Additional commentators weighed in to note that the case outcome could have a broad-based salutary effect on the marketplace nationally. One stated that increased price competition enabled by lower credit card processing fees could spur spending. Another stated that, "[Y]ou're likely to see lower prices for the merchants, which hopefully get passed on to consumers."

And any card-related savings accruing to consumers in Florida and other states are obviously a positive development.

Source: Reuters, "American Express card rules violated U.S. antitrust law," Jonathan Stempel, Feb. 19, 2015

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