American Express Merchant Restrictions

American Express’ dispute with the Department of Justice over the restrictions AmEx places on the way its merchants treat its cards has been widely reported on in the news lately. DoJ is particularly incensed with a provision in the bank’s merchant agreements that bans retailers from steering customers to other card brands (e.g. Visa, MasterCard or Discover), which charge much lower payment processing fees than AmEx. As of today, the two parties have not found a mutually acceptable resolution to their dispute and a court battle looks inevitable.

The American Express rules that are at the heart of the bank’s disputes with DoJ prevent merchants from:

• Indicating or implying that they prefer other credit card brands over AmEx cards.
• Trying to dissuade cardholders from using their AmEx cards.
• Criticizing or mischaracterizing the cards or any of AmEx’ services or programs.
• Trying to persuade or prompt AmEx cardholders to use any other credit cards or any other method of payment (e.g., cash or check).
• Imposing any restrictions, conditions, disadvantages or fees when an AmEx card is accepted that are not imposed equally on all other credit card brands.
• Engaging in activities that harm American Express’ business or brand.
• Promoting any other credit card brand (except the merchant’s own private label card that they issue for use solely at their establishments) more actively than the merchant promotes AmEx cards.

So there it is. In effect, even though Visa and MasterCard reached an out-of-court settlement with the Department of Justice, allowing retailers to offer consumers discounts for using certain types of cards or to steer customers towards cash, check or other forms of payment, merchants accepting American Express cards still cannot do all that.

American Express does allow merchants to offer discounts from their regular prices for payments in cash or by ACH funds transfer or check, something Visa and MasterCard also allowed even before the DoJ settlement.

Additionally, American Express bans merchants from accepting its cards for any of the following:

• Adult digital content sold via Internet Electronic Delivery.
• Amounts that do not represent bona fide sales of goods or services.
• Cash.
• Charges that the cardholder has not specifically approved.
• Costs or fees over the normal price of products or services (plus applicable taxes) that the cardholder has not specifically approved.
• Damages, losses, penalties, or fines of any kind.
• Gambling services (including online gambling), gambling chips, or gambling credits; or lottery tickets.
• Illegal activities and / or fraudulent business transactions.
• Overdue amounts, or amounts covering returned, previously dishonored, or stop-payment checks.
• Sales made by third parties or entities conducting business in other industries.
• Verifying a customer’s age.

The above restrictions are unlikely to be affected by the eventual outcome of AmEx’s dispute with DoJ.

Image credit: Wikimedia Commons.