Government Sues Visa, MasterCard

Share this content:
As rival credit card issuers begin offering introductory teaser rates of zero percent to attract customers, the Justice Department this week filed a lawsuit against Visa and MasterCard saying the two companies have limited customer choice and blocked competition from other card brands. Attorney General Janet Reno said the lack of competition has delayed development of smart cards and other innovative card products for more than a decade and suggested that consumers would receive better offers if banks offered brands besides Visa and MasterCard. The lawsuit says Visa and MasterCard, which are owned by associations of banks and control 75 percent of the card market, engage in anticompetitive practices when they prohibit member banks from issuing cards not bearing their brands. The Justice Department proposes that other branded cards also be allowed to leverage the reach of such banks and participate in these marketing efforts. In the Greenwood Trust vs. Visa case in 1991, banks owned by Discover Card were denied the right to issue Visa cards. "Banks that want to offer their customers card choices beyond Visa and MasterCard have been prevented from doing so,'' said Joel Klein, assistant attorney general for Antitrust. Attorneys for both Visa USA, San Francisco, and MasterCard International, Purchase, NY, have said that consumers enjoy unlimited choice of credit cards and that competition in the credit card market is intense. First USA spokesman George McCain declined to comment on whether or not the company would consider marketing other card brands if the Justice Department wins its suit. He did defend Visa and MasterCard, saying, "We believe the action lacks merit in law and equity and are confident they will prevail. Offers for cards from American Express, New York, and Discover, Riverwoods, IL, would not start appearing in the mail until the suit is resolved, and even then would face competition from banks issuing rival cards. Industry experts were unsure how additional brands would affect direct mail solicitations.

Next Article in Marketing Strategy

Sign up to our newsletters

Company of the Week

Brightcove is the world's leading video platform. The most innovative and respected brands confidently rely on Brightcove to solve their most demanding communication challenges because of the unmatched performance and flexibility of our platform, our global scale and reliability, and our award-winning service. With thousands of customers and an industry-leading suite of cloud video products, Brightcove enables customers to drive compelling business results.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above