BAUMHOLDER, Germany — Americans who used their U.S.-issued credit and debit cards for off-base purchases overseas may be getting a windfall as the result of a class-action suit settlement.
The major credit card-issuing companies have agreed to pay $336 million in claims for charging undisclosed currency conversion fees after a July 26 deal resolved a long court battle.
Though the deal is tentative, several companies agreed to pay claims and court-approved fees. The deal means credit card holders — including many of the estimated 500,000 American Department of Defense personnel overseas — could get back 2 percent in “foreign transaction fees.” Those are the fees that debit and credit card companies add to foreign currency purchases and are over and above currency fees already spelled out in credit card agreements, said Chris Burke, a partner with Lerach Coughlin Stoia Geller Rudman and Robbins at the law firm’s headquarters in San Diego. Lerach Coughlin, along with the Philadelphia-based firm of Berger & Montague, filed the class-action suit on behalf of the credit card holders.
How much consumers get back depends on the amount of each claim, and those claims may be retroactive to February 1996, depending on the final settlement terms, Burke said. That could mean a $300 settlement to the consumer who used an American credit card for $2,000 worth of purchases overseas, he said.
Those eligible for reimbursement will get terms of the final settlement as “stuffers” in their credit card bill, Burke said.
“And they have to be careful not to mistake them for advertisements and throw them away,” he said.
Settlement terms also will be published in newspapers, as well as on the law firms’ Web sites, along with an electronic filing capability, during a “lengthy” filing period, Burke said.
The companies agreeing to the settlement include credit card issuers such as MasterCard; CitiGroup, which owns Diners Club; JPMorgan Chase; MBNA; First USA; and VISA USA, Burke said.
The settlement also involves debit and credit cards from Bank of America in Charlotte, N.C.; JPMorgan Chase & Co. in New York; and Washington Mutual Inc. of Seattle, according to media accounts.
The deal does not include American Express, which also is a defendant in the suit.
The credit card-issuing companies reached the agreement, but the defendants have denied wrongdoing. A preliminary approval hearing for the deal is scheduled Sept. 11 at the U.S. District Court for the Southern District of New York in Manhattan, Burke said.
While the settlement will put money in customers’ pockets, the fees won’t go away, but instead will be clearly disclosed in credit agreements.
Using credit cards and debit cards — even with the fees — still gives consumers the best currency exchange rates, said Charles Leocha, a former soldier, author, Boston-based travel journalist and founding member of the travel Web site www.tripso.com.
Total fees to use commercial cards have increased dramatically, Leocha and Burke said. In 1996, VISA and MasterCard added a 1 percent foreign-transaction fee, Burke said. Since then, some credit card companies had added more fees to the point that a cash advance from a credit card overseas may cost the consumer as much as 7 percent in fees, Leocha said.
“Getting cash advances from [credit cards] is the worst deal of all,” he said.
For more information, visit the law firms’ Web sites at: www.bergermontague.com or www.lerachlaw.com.
