Earlier this year, a class action lawsuit was brought against several major credit card companies concerning their foreign currency transaction fees. The class action lawsuit alleged that the credit card companies “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.”
It appears as though the settlement amounts for the class action lawsuit – Foreign Currency Conversion Fee Antitrust Litigation (MDL 1409), have been announced. The tentative agreement by the defendants is to pay $336M to settle claims and pay attorney fees.
Are you eligible for a settlement? If you made a transaction (purchase, cash advance, cash withdrawal or internet transaction) in a foreign currency on a Visa-, MasterCard- or Diners Club-branded credit, charge or debit/ATM card issued in the United States at any time from February 1, 1996 to November 8, 2006, you may be a member of the Settlement Damages Class. This does not mean you had to leave the country, only that you had to make a transaction in a foreign currency, including on-line purchases.
There are 3 claim options:
Refund Option 1 – Request an Easy Refund of $25. This Option is recommended if you traveled outside of the U.S. for less than one week or had foreign transactions of less than $2,500 using your eligible cards during the 1996 to 2006 period. (Green Form); OR
Refund Option 2 – Request a Total Estimation Refund based on typical spending during travel and your answers to a few questions about your own travel outside of the U.S. This Option is recommended if you traveled outside of the U.S. for more than one week or had foreign transactions of more than $2,500 using your eligible cards during the 1996 to 2006 period. Refunds will be a maximum of 1% of estimated foreign transactions. (Blue Form); OR
Refund Option 3 – Request a refund based on information that you provide concerning your Annual Estimated foreign transactions during the 1996 to 2006 period. This Option is recommended if you had extensive foreign travel or foreign transactions and are willing to provide year-by-year information. Refunds will be a maximum of 1% to 3% of foreign transactions. This is the only Option you can use to get a refund for corporate card use. (Red Form)
Final approval of the settlement has not yet occurred. The hearing for final approval of the settlement is scheduled for March 31, 2008, and the deadline for filing a claim is May 30, 2008.
Our situation: My wife and I lived and traveled extensively outside the US during this time period while serving in the military. We just received the claim form in the mail, and need to decide what to do.
Which option should we choose? We can choose Option 1 ($25), or Option 2 (an estimated claim). We do not have accurate records for this time period so we will have to consider out roptions carefully. There are pros and cons to each.
Option 1 – quick, easy, pretty much guaranteed. Maxes out at $25.
Option 2 – more work, longer claims processing, not guaranteed. Could return more than $25.
I will have to do some research to determine how much work it will be to do Option 2, otherwise, Option 1 will be fine. This is money we weren’t expecting, and we don’t need it to pay a bill, so it is a nice benefit. Depending on how much work it is, I may just take the automatic $25. I’m going to think about it this weekend, and try to find supporting paperwork.
Which would you choose?