3 Big Drugstore Chains Sue Amex Over Contract Restrictions

CVS Caremark Corp., Rite Aid Corp. and Walgreen Co. this week filed a lawsuit against American Express Co. in U.S. District Court for the Eastern District of New York. The suit alleges that the contracts AmEx requires merchants to sign to accept its cards prevent them from steering customers to competing products. While Visa and MasterCard set the interchange rates as part of the fees retailers ultimately pay issuers to accept their cards, AmEx and Discover Financial Services negotiate their card fees directly with retailers. AmEx has said its credit cards attract "premium customers," so it sets the transaction fees it charges retailers higher than other brands charge. Attempts to reach attorneys for the retailers were unsuccessful. An AmEx spokesperson tells CardLine that, "based on our preliminary read, we do not believe there is any merit to their argument. We intend to vigorously defend our position."