17 February 2007
Some action, maybe some class
Subject to final Court approval, a settlement has been reached in In re Foreign Currency Conversion Fee Antitrust Litigation (MDL 1409). This web site supplies information about the litigation and the settlement, and provides links to relevant documents for Members of the Settlement Classes and others interested in the settlement.
The lawsuit is about the price cardholders of Visa-, MasterCard-, or Diners Club-branded payment cards were charged to make transactions in a foreign currency, or with a foreign merchant, between February 1, 1996 and November 8, 2006. Plaintiffs challenge how the prices of credit and debit/ATM card foreign transactions were set and disclosed, including claims that Visa, MasterCard, their member banks, and Diners Club conspired to set and conceal fees, typically of 1-3% of foreign transactions, and that Visa and MasterCard inflated their base exchange rates before applying these fees. The Defendants include Visa, MasterCard, Diners Club, Bank of America, Bank One/First USA, Chase, Citibank, MBNA, HSBC/Household, and Washington Mutual/Providian.
Inasmuch as I am a person who transacts business with some of these defendants, I was duly sent a copy of the notice: the preliminary approval order can be read here. A settlement fund of $336 million is to be established; attorneys bringing the action have requested that of the $318 million remaining after expenses, 27.5 percent ($84 million) be earmarked for their fees. This is a ton of money, but a lower percentage that one tends to expect from this sort of thing, and it will leave $231 million to pay claims. We will overlook, for the moment, the plaintiffs' claim that the banks charged $3.8 billion in fees challenged by the suit.
I don't have that many foreign transactions; I have noticed that they're spelling out the details better on monthly statements, which is a Good Thing. The most recent, from one of the banks named in the suit, was for $62.83, and here's how it was listed:
FOREIGN CURRENCY 48.48 EUR 01/23 RATE 0.77161
1% INT'L SERVICE FEE $0.63
Legally, I could file a claim for some previous transactions (the cutoff is 8 November 2006). Total foreign transactions I can document for the period in question come to just over $100. I may file a claim just to see what, if anything, I get back.