Consumer Groups Back Amex, Dean Witter in Justice Probe

Two prominent consumer groups sent a letter to Attorney General Janet Reno, aligning with American Express Co. and Dean Witter, Discover & Co. in a current Justice Department antitrust investigation of the credit card industry.

The Washington, D.C.-based organizations, Consumer Federation of America and Consumers Union, said in a letter dated March 18 that the Visa U.S.A. and MasterCard International rules the Justice Department is investigating hurt consumers.

The letter, written by Stephen Brobeck, executive director of Consumer Federation of America, and Michelle Meier, counsel for government affairs at Consumers Union, says, "The rules appear to create serious barriers to healthy competition in the credit card business and in related businesses, such as ATM and other types of payment cards."

The rules in question prevent members of Visa and MasterCard from issuing card products offered by American Express or Dean Witter, Discover.

The consumer groups argue that because many consumers get their credit cards through their primary bank, they can only benefit from banks offering a range of products.

A Visa spokesman said that the letter "raised serious questions" about the "motives and credibility" of the consumer groups.

In February, the Independent Bankers Association of America also sent the attorney general a letter, which supported the bank card associations' right to enforce such membership rules.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER