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Visa Files Lawsuit in Effort to Protect Card Brand

SAN FRANCISCO, Nov. 25 /PRNewswire/ -- Visa U.S.A. filed suit alleging trademark infringement against American Express (NYSE: AXP) in federal district court here today, seeking to stop AmEx's attempt to take a "free ride" on the Visa brand and marks through a card program with Advanta Corp. (Nasdaq-NNM: ADVNA, ADVNB).

"This is a blatant attempt by American Express to use the Visa trademarks to promote its own competitive brand," said Carl Pascarella, president and CEO of Visa U.S.A. "The Rewards Accelerator card co-mingles the Visa and American Express brands in a way that is harmful to Visa and its member institutions and to consumers. AmEx is using the Visa brand -- the world's best known and most respected payment card brand -- as a lure to sell more American Express cards."

The lawsuit charges American Express with trademark infringement and several other violations stemming from the joint program initiated earlier this month with Advanta. The program features the "Rewards Accelerator" Visa card that requires cardholders to have an American Express card and allows them to accumulate points on AmEx's "Membership Rewards" program.

"The Rewards Accelerator program is like a McDonald's franchisee using the Golden Arches as a customer draw and then selling them a Burger King Whopper once they're in the door and vice versa," continued Pascarella. "These corporations would never allow it and neither will we."

According to Pascarella, the use of the Visa trademark to market the competitive AmEx product dilutes and obscures one of the world's most recognized brands. This is harmful to the Visa brand and to the thousands of member financial institutions that use it.

The suit highlights the marketing materials for the Rewards Accelerator card which explicitly link Visa cards to the AmEx payment card and to American Express' Membership Rewards program. The solicitation reads:

"Rewards Accelerator is a Visa card, issued by Advanta National Bank that

works with [an American Express cardholder's] existing American Express

'Membership Rewards' account to allow [the American Express cardholder] to

earn additional points."

In response to Advanta's prior assertion that this program complies with Visa's rules, Pascarella said, "Our existing regulations clearly outline the appropriate use of the Visa brand. Couple that with the more than one billion dollars Visa and its members have spent over the last decade to differentiate the Visa brand from American Express with our successful advertising campaign and I'm astonished to find someone could misinterpret our position on this issue."

In addition, and given the strained interpretation of Visa's rule by Advanta, the Visa board today reaffirmed the existing position by amending the regulations to provide that no member may "tie" a Visa product to any product issued by competitors including American Express and Dean Witter Discover and no member may use the Visa marks in connection with a promotion together with marks associated with American Express or Dean Witter Discover payment card related services.

"American Express is a bank competitor and the idea that they're trying to appear to be an ally is somewhat disingenuous," said Philip G. Heasley, Vice Chairman of First Bank. "They want our business and they want our customers and to let them use the Visa brand we've built to take them away would be foolish."

In addition to the lawsuit against American Express, Visa has notified Advanta that the "Rewards Accelerator" program violates existing regulations and requested that it terminate the program and cease soliciting cardholders.

"We do not take this action lightly -- publicly disagreeing with an important member financial institution is something we do with great reluctance," said Pascarella. "But, we can't allow one member to harm the other 14,000 Visa financial institutions in the U.S. by 'renting' the bank-owned Visa brand to American Express."

Headquartered in the San Francisco Bay area, Visa is the world's largest consumer payment system. It plays a pivotal role in developing and implementing new products, services and technologies that benefit its 20,000 worldwide member financial institutions and their cardholders businesses, governments and the global economy. Visa's 500 million cards are accepted at nearly 13 million locations worldwide. For more information about Visa, visit Visa Expo at

 -0- 11/25/96

/CONTACT: David Melancon, 415-432-2427, or Carolyn Bretschneider, 415-432-4185, both for Visa/


CO: Visa U.S.A.; American Express; Advanta Corp. ST: California IN: FIN SU:

MM-DA -- NYM152 -- 3988 11/25/96 18:03 EST
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Publication:PR Newswire
Date:Nov 25, 1996
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