tomboy

Yesterday I received a notice of a class action lawsuit settlement in which VISA, MC, and some major banks were the plaintiffs who anteed up $336 million to aggrieved defendants.

Could these 3% credit/debit card fees on ATM withdrawals be caused by the need to fund this settlement?

As Deep Throat said in Watergate, "follow the money"

robjame

$360 million is chump change to Visa, MC and the banks. They already charge merchants a per transaction fee, a per cent of sales, point of sale machine rental, a yearly fee for you to use the card, etc. And remember the main line of business is the CREDIT business. Most of their billions is made by charging interest rates of 18 - 25% for delinquent payment (credit). No tag day needed yet. No excuse is required for the banks to figure out how to get more money.

LoveItaly

I guess the credit card companies do not count me as one of the best customers. I have four credit cards and I do not pay an annual fee for any of them. And since I pay my statement balances in full every month none of them have ever received a penny in interst from me.

And my ATM cards only charge 1%, at least at this point.

But yes, "follow the money". AMEX had a class action suit against them some time ago and it is to be settled in 2008. I would imagine the attornies will collect the vast percent of the settlement.

twk

FWIF: It's plaintiffs (the class members) who sue and recover from defendants (the credit card companies).

As a lawyer, I can tell you that most class action lawsuits are just designed to wring out a settlement from a defendant with deep pockets, which will benefit the plaintiffs attorney's, and settle some theoretical liability faced by the defendants rather cheaply, while giv.inge the class members little relief whatsoever. It is the worst racket going.

fmpden

I do agree with twk that these class actions suits mostly benefit the lawyers.

Everyone is complaining about the "new" fees when in fact the credit card are just being forced, by the suit, to reveal these fees. In the past these currency conversion fees were buried in the exchange rate so nobody noticed. Because of the suit these fees now have to be identified on the statement.

However, one fee -- the 1% network fee charged by Cirus, Plus, etc., -- is still buried in the exchange rate because it is a "cost of during business" for the credit/debit card companies. We have always paid some fees for the use of the credit/debrit card currency conversion but now they have to tell you.

shellio

The 3% fees are not new. What is relatively new is the requirement that they be made transparent, i.e. that the borrowers (the plaintiffs) be told what it was costing them to use that credit card or ATM card.

The credit card issuers and banks are the defendants. They were sued because of their deceptive practices in hiding the 2%-3% fees that they have been charging all along, rather than revealing them so that people who were looking for credit card issuers would be able to compare the fees charged by the various credit sources.

And as for the attorneys making money, I say good for them. I, and probably many others on this board, will be recouping some of that money thanks to the efforts of those attorneys. Since class actions are the only practicable way for "the little guy" to have any influence whatever on the shoddy practices of the banking industry, more power to them.

FauxSteMarie

I am also a lawyer and I agree with the first lawyer who posted. I have gotten a couple of checks for about $40 from class action suits. Once I got a certificate for a few bucks off an airfare with some airline; I never used it. I suspect most people didn't use them. The lawyers got all the money.

LoveItaly

Well thanks for not blasting me..after I posted I expected some growls from lawyers, lol. I have a lot of lawyer's in my family so I am not anti lawyers (attorney's) but the class action suits always seem like more trouble then they are worth regarding filling out forms etc. I will be interested in what small check I will receive from the AMEX class action suit if anything. And that is what that suit was about, the fact that AMEX didn't break down their charges over and above the actual exchange rate.

ira

Hi T,

>Could these 3% credit/debit card fees on ATM withdrawals be caused by the need to fund this settlement?

No.

As noted, the fees had previously been hidden.

Now they are not hidden.

Fill out the forms. You might get as much as $10.

jdraper

I too am a lawyer and I also think that it is the lawyers who will make all of the money on this deal. However, I sat here at home, did nothing but fill out the forms and I will get a small bit of money for my effort. The lawyers brought the suit and negotiated the settlement while I was sitting here doing nothing and didn't even know I was being ripped off. Good for the lawyers this time since I would never have persued this action on my own and you probably wouldn't have either. $40.00 may not be much but I can sure buy a lot of wine in Italy with it, can't you?

FauxSteMarie

The one benefit of a class action suit is that it can stop an illegal practice and cost the company a lot of money. Ultimately, the people who were wronged get very little but the company finds another way to pass the costs on to the consumers.

fmpden

But in this case, I am not sure if it was an illegal practice. Not sure what the damages are or were. If you were being charged a currency conversion fee that was buried before but is revealed and it is roughly the same, what has been gain other than a notice issue? I think class action that correct great wrongs are terrific but I see a lot of class actions for small errors that bring little benefit to the class but great benefits to the attornies. But then again, that is how the system works.

Dukey

"But then again, that is how the system works."

And, IMO, unfortunately, that is the very attitude that allows the system to keep working the way it does.

fmpden

Dukey, not sure what you mean by that comment. Are you suggesting that class actions suits not be allowed? Understand that is true for many countries. What is the alternative?

Christina

I think class action suits are great, because they give a voice and power to one small individual. A single person would never know about, perhaps, but couldn't afford to file a suit for some of these things, so this is the only way a suit would likely proceed and the company forced to pay something. I don't see anything wrong with the lawyers' getting a large portion of the settlement, they do the work, and it wouldn't exist otherwise. I think there are many laws and actions that protect the interests of the minority or people without large amounts of money, and I think that's a good idea.

I think in this case, there are damages because the plaintiffs were not disclosing it at all. I'm not sure about that, but I think it wasn't even buried in the fine print, but people had no way of knowing the charges were anything other than the straight conversion of the foreign charge to USD. Or maybe the fine print used terms that were not easy to understand what was really going on, some of those contracts are written to deliberately mask what's happening or use vague and nonspecific terms (you wouldn't think so, but I have CC statements of terms on this issue that seem pretty vague to me). So, if it was disclosed in the fine print but difficult for the average consumer to be aware of or figure out, there are damages because if a person knows what actual charges and fees are for a card, they can make their own decision as to whether they want that card or to cancel it, based on those terms. It's no different than a card having to disclose interest rates or anything else, as far as I'm concerned. I agree it would be hard to quantify the damages, however, but if a CC lied to you or hid some other type of fee or interest charge, it would be hard to quantify those damages, also, if you just say, so what, they still exist.

YOu could argue that for one person, the damages could be the entire amount of those charges, because if you were aware of them you would have cancelled the card or not have used it for those purchases.

robjame

IMO the problem is a legal system which allows lawyers to charge contingency fees (fees only payable on the result of the verdict). These are typically 25 - 50% of the settlement but are limited to 100%. LOL Lawyers only take on cases where they can expect big payouts.
There are countries (and my own province of Ontario) that don't allow them.
Of course the counter argument is that it allows the "small guy" to sue.

Underhill

Has there been any recent news about the lawsuit? Given all the required paperwork that we filled out, I do hope something good results in our lifetime.

Christina

I don't follow the logic, the lawsuit was about that charge, so the charge preceded the lawsuit.

My ATM card has a 3 pct fee and has nothing to do with Visa or MC, it's independent. It's just what banks are doing now to raise funds, they are all in the same business and keep an eye on competitors and get their ideas elsewhere.

ira

Hi Un,

I recently got a check for $25.

avalon

I got a check for $80.00 a few weeks ago but I don't think it was for this suit. Hey if all I get is $10.00, it's 10 dollars I didn't have before.