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By Mike Scarcella

March 22 (Reuters) - American Express AXP.N has been hit with a proposed class action lawsuit in Rhode Island federal court accusing it of overcharging thousands of U.S. merchants for credit and debit card fees on consumer transactions.

Ten retail plaintiffs including a delicatessen, fine clothier, florist and furniture store filed the lawsuit on Thursday seeking a court order to block American Express policies that they said violated U.S. antitrust law.

American Express restricts competition through its use of “non-discrimination provisions” to bar merchants from encouraging customers to use payment cards with lower transaction fees, the lawsuit said.

American Express and the plaintiffs’ attorneys did not immediately respond to requests for comment.

The merchants’ claims in the case mirror swipe-fee allegations lodged against Visa V.N and Mastercard MA.N in a coordinated legal proceeding in Brooklyn federal court over payment card fees.

Visa and Mastercard by the end of 2013 had abandoned their rules stopping merchants from steering customers to use lower-cost means of payment, according to the lawsuit.

A federal appeals court last year in Manhattan upheld a $5.6 billion settlement involving claims from about 12 million retailers against Visa and Mastercard. Other related litigation is ongoing against the two companies.

“It is Amex’s rules alone that prohibit U.S. merchants from using discounts, surcharges, verbal prompting, signage, and other techniques to incentivize shoppers to use cheaper payment cards,” the lawsuit said.

The lawsuit said binding arbitration clauses between American Express and merchants have hindered efforts to resolve the plaintiffs' claims.

The 5,155 merchants at the heart of the new lawsuit first brought claims individually in arbitration. But American Express refused to pay a $16 million arbitration invoice, and so the cases were administratively closed, according to the lawsuit.

The merchants’ complaint said American Express was in default in the arbitration proceeding and could not now move to keep the merchants from bringing their claims in a U.S. court.

“For many of these merchants, credit-card swipe fees eat up roughly half of what the small business owner can take home at the end of the month,” according to the lawsuit.

The case is 5-Star General Store et al v. American Express Company, U.S. District Court for the District of Rhode Island, No. 1:24-cv-00106-MSM-LDA.

For plaintiffs: Deepak Gupta of Gupta Wessler; Scott Harris and Peggy Wedgworth of Milberg Coleman Phillips Bryson Grossman; Tracey Kitzman of Song P.C.; and Robert Cohen of Law Offices of Robert W. Cohen P.C.

For defendant: No appearance yet

Read more:

Mastercard, Visa lose bid to end parts of swipe fee litigation

Visa, MasterCard $5.6 bln settlement with retailers is upheld

(Reporting by Mike Scarcella)

((Mike.Scarcella@thomsonreuters.com;))

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