NEW YORK CITY (dpa-AFX) - American Express (AXP) Thursday announced agreement to settle two putative antitrust class actions filed by U.S. merchants that challenged the company's card acceptance agreements.
The first lawsuit challenged the Non-Discrimination Provisions in the company's merchant contracts, while the other challenged American Express' Honor All Cards Provisions.
Under the terms of agreement, Merchants have agreed to lay-off certain surcharges applicable to the American Express prepaid card holders.
The settlement addresses certain merchant concerns, while helping to ensure that American Express Card Members are treated fairly at the point of sale. It will also limit the Company's exposure to future legal claims.
'While the modification of our contract provisions gives merchants some additional flexibility, many merchants continue to believe, as we do, that surcharging is fundamentally anti-consumer, ' said Tim Heine, Managing Counsel of American Express.
Few merchants have taken advantage of earlier opportunities to surcharge out of concern that it could risk alienating customers, and drive them to patronize competitors who do not surcharge, said Heine.
Under the settlement, American Express will pay reasonable attorneys fees for both cases up to a maximum total of $75 million, as approved by the Court.
American Express will also reimburse the class plaintiffs' costs of notifying merchants of the settlement up to $2 million and will provide an additional $2 million fund for plaintiffs to communicate to merchants about the terms of the settlement.
The settlement agreement has been submitted to the Court for approval. Costs associated with the settlement will be recognized in the fourth quarter, American Express said.
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