Judge Dismisses Shareholder Lawsuit Against American Express
A U.S. District Judge in Manhattan has dismissed a lawsuit claiming that American Express defrauded shareholders after losing its 16-year partnership with Costco. The lawsuit alleged that AmEx downplayed the significance of the upcoming damage, causing shareholders to lose more money than they anticipated.
When the Costco contract ended, the warehouse chain made up 8% of American Express’s revenue and 20% of its loan market. The market value for AmEx dropped $8 billion just two days after announcing that Visa would be the new co-branded card provider for Costco.
The plaintiffs have an opportunity to amend their complaint, but for now, an American Express spokesperson says they are pleased with the results. AmEx shares are currently just 6% lower than their all-time high in 2014, coming in at $90.54 a share.
In August, American Express launched a new installment plan system to encourage cardholders to make large purchases. Transactions over $100 can be set up on a payment plan separate from other card purchases. Customers essentially have the opportunity to turn their card balances into small personal loans they can pay off at any time.