Friday,(link here) I discussed a slew of SCOTUS (Supreme Court of the United States) decisions afforded us by the Roberts’ Court- the most pro-business (read “Big Business”) Supreme Court ever. Well, here is a case they just decided, that small businesses can overturn without going to court- by using public opinion against one specific Big Business.
SCOTUS provided a 5 to 3 decision in favor of American Express Co v. Italian Colors Restaurant. This decision basically gutted the Federal Arbitration Act. SCOTUS ruled that retailers are bound by individual arbitration, even though class arbitration or class action lawsuits are the only avenue that could make such challenges financially feasible. (You do know that most of these banks and credit cards insert clauses- to which you must agree- that all disagreements shall be subject to arbitration- and not the courts.) Moreover, Justice Scalia claimed, in his opinion for the majority, that “…antitrust laws do not guarantee an affordable procedural path to the vindication of every claim.” Right! More power to the rich corporations at the expense of the smaller ones. (By the way, Justice Kagan characterized this decision, as it’s just “too darned bad”.)
Now, a little more background on the issues. American Express (AmEx) has a policy that demands restaurants (and other retailers) accept all flavors of their credit AND debit cards- The American Express Platinum, Gold, Silver, and Green; the Optima; the Blue, Cash Preferred; and the list goes on. The biggest fees seem to be associated with the debit cards they offer. And, some of these cards have fees that are some 30% higher than other vendors’ offerings. And, of course, AmEx demands that all disagreements be handled by arbitration- and not class arbitration, either (so that a bunch of small restaurants or vendors can get together and share costs). To help explain this, assume your cable company overcharges you 40 cents extra on each bill; you won’t go to court over it, but a bunch of you- and me- could gang up together to make the courts pay attention to the hundreds of thousands of dollars the cable company makes each month by this practice.
While I couldn’t resolve the civil rights issues that SCOTUS gutted, I can suggest an avenue for restaurants and vendors to get even with American Express. Using the laws that the other Courts have recently decided against American Express.
Late last year, a US District Court ruled that a 4% surcharge may be imposed on customers using credit cards. And, one is permitted to charge the customer the fees imposed on debit cards. Of course, there are state laws against these fees in 10 states- California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. But, if you are not in those states- well, this idea is perfect for you.
Print signs on your doors and by your cash register, explaining that you are more than willing to accept the conventional American Express cards, as well as the normal complement of Visa, MasterCard, and Discover. But, the other AmEx flavors, with their ridiculous fees are making business untenable. So, there will be a 4% surcharge for their use. And, a fee matching the fee that is imposed on the AmEx debit cards (this does not seem to be uniform across the board, so I can’t proffer a number.) Notify the customers that if they use their Visa, MasterCard, Discover Card, or American Express Platinum/Gold/Silver/Green or any non-AmEx debit card, there will be no additional fees.
This will make the customers gang up on American Express. No arbitration. Instead, customer pressure on AmEx should lead to the desired solution- reasonable fees. And, in the meantime, you are not swallowing the AmEx surcharges- but passing them to their customers, instead.
I love it. Thank you, Roy. Someone has to stand up to the Biggies!!
Carol Tomany recently posted..The Psychology of the Bobble Head Doll
Thanks, Carol- for the visit, and approbation!
Yay! Love hearing stories where the little guy or company wins. The victories may be few & far between so its good to hear of the ones that happen.
Shawn recently posted..Do You YouTube?
Glad to give yo some ideas, Shawn. Thanks for the visit and comment.
American Express is out to screw not just their customers but also their merchants? I seem to remember a time when businesses said they did not take American Express at all. The logic behind doing business this way eludes me. How can you make money if you piss off your clientele?
Ann Mullen recently posted..Senior Care: What are you planning to do this summer?
AmEx would put it that they are out to make money, Ann. but, they don’t want to be challenged on how they do it. Pretty much the way the banks were, until the law changed. In AmEx’ case, the Supreme Court made the change more difficult- if not impossible.
Sadly, we are slaves to credit these days and Amex et al will continue to yank our chains till we start standing up to them…
Caro Ness recently posted..The Angler From Angelsea
You are right, Caro. It is amazing how we are charged- as are the vendors we choose.
As a merchant I’ve always been aware of AMEX’s higher fees and yet still choose to accept it. Am often surprised by the number of customers that also seem to be aware of it too and some even apologize (yet still use) about the card.
Yes, AmEx manages to make a fortune off their skim, Alessa.
I really do dislike Amex and am thankful that they have very little influence in NZ although they keep trying. Interesting solution Roy. Hope is works.
Do you know about the challenges of tap and go credit cards?
Roberta Budvietas recently posted..You Have to ASK
I hope it works, too, Roberta. Those tap and go mean that anyone who has a device nearby can swipe your information. That scares the crap out of me! What say you?
Some big corporations are just greedy. I can’t believe that it is legal to impose such unfair conditions on customers. How did they manage to get away with this for so long?
MuMuGB recently posted..History Lecture
It’s those agreements that are foisted upon us, Muriel. Where they write down that our agreement to offer the cards or use their cards means any disagreement must be handled by arbitration. it’s not like going to small claims court (which is what most of us would have), where the costs are lower. Going to arbitration can cost between $ 25 and $ 40K- which means chiseling us out of $ 1, $ 10, or even $ 500 a month is not enough to justify such an expenditure.
Credit card company=new mafia. It’s a loan sharks scheme not only done legally, but protected.
Lisa recently posted..Novae Prime by Lisa Brandel
I don’t think the Big Banks are the new Mafia, Lisa. At least on the surface, the authorities are seeking the Mafia out and placing them in jail. In this case, we bail out these institutions when their nefarious practices backfire- because they are too big to fail…
Customer pressure sounds like a good idea.
That’s the goal, Melina. The power of the people to the people!
The Supreme Court Decisions- and Restaurants – Friday,(link here) I discussed a slew of SCOTUS (Supreme Court of… http://t.co/cjGTlMZBHm