Amex Under Fed Investigation for AntiCompetitive Acts
 

The AP story below indicates that the Dept. of Justice is looking into Amex's fight against merchants trying to get customers to use other, (cheaper) cards. Since Amex's higher charges are the prime source of its (somewhat) better rewards programs, this could have a bad effect on Starpoints, Membership Rewards, et al. (although perhaps an overall positive effect by lowering credit card charges).

"American Express said it intends to cooperate with the department's [of Justice] request for documents and other information regarding the company's policies related to merchant surcharging and its "anti-steering" policies that prohibit merchants from discriminating against the American Express card in favor of other forms of payment."

Entire story at:
http://news.yahoo.com/s/ap/20081031/...nvestigation_1

yikes thats no good for us point hoarders

"Receipt of such a request does not mean that a formal complaint will be filed."

anyone have a better understanding / more links?

i dont see how amex fees/points are involved.

I'm not quite sure I buy that. I don't see (at least from the point perspective) how Membership Rewards is a better rewards program than Diners' Club Club Rewards, which works (for the past few years) on the MasterCard network, and thus doesn't get Amex's higher charges. (You may prefer MR or CR based on which airline(s) you collect with, but when you compare the few airlines that are in both, I'm not sure why MR is better from the standpoint of a rewards programs. I'm not saying it's worse either, just that MR and CR seem to be pretty similar, $1 = 1 mile with most airlines, with occasional redemption bonuses and -- these days -- few earning bonuses.)

Starpoints, in turn, works well because of the hotel program, moreso than because of Amex. This hotel program is uniquely structured in that points turn into miles 1:1. The average hotel program converts points to miles 5:1 or 6:1. (Starwood does this because its points haven't been "inflated" -- within their hotel earning/burning structure -- the way all other hotels have.)

This is why Amex cannot give as good a program with any other hotel chain, despite similar fees from merchants presumably for, say, an HHonors AMEX compared to an SPG AMEX.

And while the Delta AMEX gives double points on everyday purchases and advertsises that loudly, I have a Chase Visa card in my pocket that gives quadruple (UA) miles on many of the same everyday purchases (it leaves out home improvement stores), and it has no annual fee. The difference is it's never advertised, and only available "by invitation" (to some people trying to cancel other Chase cards). How can they give 4+ miles per $ at gas stations and grocery and drug stores on a Visa, if Amex can only give 2 miles per $ at the same place on the Delta AMEX?

Of course, I'm only talking about points rewards benefits here. Some MR cards have things like lounge access, but it seems to me you need much more than the basic (already $$$) annual fee to get that as a benefit, no?

That's true. It's interesting that Amex hasn't exploited their higher merchant fees to give better rewards.

I'm amazed the AMEX has gotten away with the high rates they charge merchants (which is then passed on to the consumer).