New York antitrust trial begins over credit card arbitrations
By Nate Raymond
NEW YORK (Reuters) - Three of the largest U.S. credit card issuers headed to trial on Monday to defend accusations that they colluded to force customers to agree to settle disputes through arbitration rather than in class action lawsuits.
American Express Co (AXP.N: Quote), Discover Financial Services (DFS.N: Quote) and Citigroup Inc (C.N: Quote) face the allegations in two antitrust lawsuits filed by customers who had to sign arbitration agreements in order to get credit cards.
U.S. District Judge William Pauley in Manhattan is hearing the cases without a jury.
The trial follows a landmark U.S. Supreme Court decision in 2011. That case involved an AT&T Inc (T.N: Quote) unit, and bolstered corporations' ability to require customers to arbitrate disputes over fees or other issues.
Arbitration puts more costs and burdens on individuals than if they collectively pursued claims in class actions, consumer advocates say.
No damages are being sought in the antitrust lawsuits, which were filed in 2004 and 2005, and consolidated for trial before Pauley in March.
Instead, the plaintiffs are asking the judge to order American Express, Discover and Citigroup to remove arbitration clauses from their cardholder agreements.
The plaintiffs also want an eight-year ban on arbitration clauses by the trio, which had 31.4 percent of outstanding credit card balances in 2011, according to The Nilson Report, a payment card industry newsletter. Continued...