NEW YORK — A federal jury has ordered American Express Co. to pay $12.5 million in damages after finding the company engaged in unfair practices under Illinois law, although it was cleared of various antitrust allegations that had also been brought against it.
The verdict, delivered on Thursday in the U.S. District Court for the Eastern District of New York, stemmed from a protracted legal battle initiated by state consumers. Those consumers challenged certain nondiscrimination clauses present in American Express’s agreements with merchants who accept its credit cards. These provisions specifically prohibit steering practices, which allow merchants to direct customers toward using specific payment methods.
The jury ruled in favor of the consumers regarding the unfair practices claim, marking a significant moment in the case. However, the panel noted that American Express did not violate antitrust laws by allegedly hindering competition in the market. This duality in the jury’s decision illustrates the complexities surrounding consumer rights and corporate regulations.
Over the course of the weeks-long trial, attorneys for the consumers argued that the company’s contractual terms stifled competition and harmed both businesses and customers. They contended that American Express’s policies limited options for consumers by preventing merchants from steering customers toward less expensive payment alternatives.
In response, American Express defended its practices, asserting that these contracts are essential for providing benefits to cardholders and merchants alike, including rewards programs and customer service support. The company has stated its commitment to maintaining fair practices while continuing to support merchants.
The implications of this verdict could resonate throughout the financial services industry, particularly as similar legal challenges arise in an increasingly competitive market. Consumer advocates view this ruling as a potential turning point in protecting consumer rights but also recognize the ongoing complexities involved in enforcing fair trade practices.
This case highlights the ongoing tensions between consumer rights and corporate regulations, raising questions about the future of such nondiscrimination agreements in the financial sector. As the legal landscape evolves, stakeholders will continue to monitor similar situations that may arise across the nation.
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