San Francisco sues American Express for billions in penalties, restitution for merchants

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San Francisco on Thursday announced it has sued American Express for billions of dollars in penalties, and restitution for merchants.

San Francisco Attorney Dennis Herrera is suing the financial services giant over anti-competitive and illegal merchant restraints alleged to be "responsible for billions of dollars in excessive and improper costs" borne directly by retailers and, indirectly, by all California consumers, the attorney said in a statement.

"The party is over for American Express, and the bill is coming due in California," Herrera said.

"American Express has rigged the game. They shook down merchants, stifled competition, and shifted costs for their extravagant member perks to even cash-paying consumers. It's unfair, it's illegal, and—under state law—it warrants tough penalties and restitution for California's merchants," he added.

American Express stock was little changed following the suit. (Click here to track its shares.)