Credit card firms sued for facilitating Internet gambling

Tuesday, Dec. 7, 1999 | 11:47 a.m.

A California man filed suit against American Express and Discover on Monday, accusing the two companies of "aiding and abetting illegal Internet gambling" in California.

The plaintiff, Northern California resident Fred Marino, lost more than $25,000 to online casinos in the summer of 1998, and charged these losses to his American Express and Discover cards. A statement from Marino's attorney said American Express threatened to sue Marino and destroy his credit report while attempting to collect on the debt.

The companies are profiting from their merchant agreements with the online casinos, the statement said, by collecting a 2 percent to 5 percent fee on each transaction, as well as interest and late fee on the charges.

The lawsuit argues that California has a "strong, long-standing public policy" against the collection of gambling debts. The lawsuit also asks a California state judge to force the two card issuers to stop extending credit for Internet gambling to California residents.

The lawsuit was filed by San Rafael, Calif.-based attorney Ira Rothken, who recently settled a similar case on behalf of California resident Cynthia Haines. Rothken filed suit last year on behalf of Haines against Visa and MasterCard, after Haines lost more than $70,000 on Internet gambling.

In October, the lawsuit was settled out of court after the defendants agreed to wipe out Haines' debt and pick up her attorney's fees. One plaintiff, Providian National Bank, has since banned all use of its cards for Internet gaming.