US Appeals Court Rules AmEx Waived Arbitration Right Over Swipe Fees

A US appeals court ruled that American Express (AmEx) waived its right to compel arbitration in disputes with over 5,000 small merchants.

The court decision stems from a class-action lawsuit filed by 5-Star General Store & Deli against AmEx, alleging exorbitant 'swipe fees' and contractual provisions that prohibited merchants from encouraging customers to use cheaper credit cards.

The American Arbitration Association (AAA) fee schedule required each vendor to pay $350 in arbitration fees, while AmEx was responsible for paying $3,150 per arbitration. However, despite repeated warnings from the AAA administrator, AmEx refused to pay its share of the fees, leading to the administrative closure of the cases.

The 1st U.S. Circuit Court of Appeals held that AmEx's nonpayment constituted default and conduct inconsistent with an intent to arbitrate under the Federal Arbitration Act, thereby waiving its right to compel arbitration.