Judge orders an estimated $800M in credit card refunds
By Michael Liedtke
Associated Press
SAN FRANCISCO — A judge has ordered credit card giants Visa and MasterCard to refund an estimated $800 million to U.S. customers who paid a hidden fee on purchases made in foreign countries.
Judge Ronald Sabraw's decision released yesterday finalized a tentative ruling that had been under court seal since February.
The case centers on a 1 percent surcharge Visa and MasterCard add to the transaction amount of credit card charges requiring foreign currency to be converted into U.S. dollars. Concluding Visa and MasterCard have been concealing the conversion fee, Sabraw ordered refunds dating back to 1996.
Attorneys representing consumer interests in the three-year-old case described the decision as vindication for millions of cardholders who had been misled for years about the costs of their foreign charges.
Visa, based in Foster City, Calif., and New York-based MasterCard called the decision confounding and vowed to appeal.
"During five months of trial, not a single consumer complained ... that MasterCard has deceived them, treated them unfairly, or harmed them in any way," said Noah Hanft, MasterCard's general counsel.
Because it's based in California, Visa is more deeply affected by the decision than MasterCard. Visa must issue refunds to cardholders throughout the country. The decision applies only to MasterCard's California customers.
Based on estimates drawn from evidence in the trial, Visa faces $740 million in refunds while MasterCard is on the hook for about $60 million, said Dennis Stewart, another of Schwartz's attorneys. The companies have not issued estimates.
In his 125-page ruling, Sabraw noted that Visa collected $817 million from its U.S. cardholders making purchases in foreign countries from 1996 through March 2002. That figure includes fees for debit card transactions.
MasterCard collected $195.5 million nationwide from foreign currency conversion fees from February 1996 through December 2000, Sabraw said in his ruling.
A May 23 court hearing has been scheduled to discuss how the rebates will be made.
