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UPDATE 2-U.S. judge OKs $336 mln credit card fee settlement
October 22, 2009 / 7:03 PM / 8 years ago

UPDATE 2-U.S. judge OKs $336 mln credit card fee settlement

* Overcharges alleged on foreign currency transactions

* Class-action lawsuit began eight years ago

* “Astonishing” 10.1 million claims filed, judge says (Adds background, details from opinion, byline)

By Jonathan Stempel

NEW YORK, Oct 22 (Reuters) - In a victory for credit cardholders who travel internationally, a U.S. federal judge gave final approval on Thursday to a $336 million settlement of a lawsuit accusing banks and credit card groups of conspiring to overcharge consumers on foreign currency transactions.

The class-action settlement won preliminary approval in November 2006. It covered holders of U.S.-issued MasterCard or Visa credit cards or debit cards and Diners Club credit cards who made foreign transactions between 1996 and 2006 and also required card companies to improve their fee disclosures.

Judge William Pauley of the U.S. District Court in Manhattan called the settlement of the eight-year-old lawsuit “fair and reasonable.”

Final approval was delayed while the details of the claims procedure were worked out.

“An astonishing 10,075,834 claims were filed,” Pauley wrote.

Visa Inc (V.N) and MasterCard Inc (MA.N), which run the largest card networks, were among the defendants. Visa spokesman Will Valentine declined to comment. MasterCard and a lawyer for the cardholders did not immediately return requests for comment.

Bank defendants in the case included Bank of America Corp (BAC.N), Citigroup Inc (C.N), HSBC Holdings (HSBA.L) HBC.N and JPMorgan Chase & Co (JPM.N).

Credit card companies often assess fees of about 3 percent when they convert transactions made in non-U.S. currencies into dollars. Lawyers for the cardholders have said the actual cost of such conversions is about one-quarter of one percent.

Pauley wrote that, while the cardholders believed that $1.1 billion of fees were at issue, there was a strong chance they could recover little or nothing had they gone to trial.

He also said the improved disclosures make it easier to compare conversion fees.

“This settlement includes significant changes in the practices by the major banks, which cannot be ignored,” he wrote in his 44-page order.

The accord comes as Congress considers whether card reforms slated to take effect in February should be implemented sooner. Many consumer groups have complained that the industry is jacking up rates and fees in advance of the changes.

The case is In re Currency Conversion Fee Antitrust Litigation, U.S. District Court, Southern District of New York, No. MDL-1409. (Reporting by Jonathan Stempel; editing by Andre Grenon)

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