You can hardly ever find any cardholder that wouldn't be confused after any cash withdrawal or making purchases abroad. Foreign transactions turn to be rather costly. On the one hand this is obvious - except for the bank commission they charge an expensive conversion. But this is not the only reason.
Several months ago sensational law process started in California. Credit news was dazzled with scandalous headlines. The largest payment systems in the world - VISA International and MasterCard - are being investigated by American justice. The regular consumers - citizens of California asserted a claim.
The essence of the matter is the following. Californians, travelling outside the US, noticed that after making purchases or cash advances in foreign currency the sum of money withdrawed from their account turned to be a little higher than it was supposed to be when they were applying for a credit card online. The reason for that was the 1% fee for conversion from one currency into another. In contracts the terms of this fee withdrawal were presented in really fine print and it was hardly possible to notice them. And account statements didn't even mention these fees. They were hidden within the details of exchange rates difference. The cardholders, owning the best credit cards were fooled.
In April the Supreme Bench of California supported the claimants and undertook Visa and MasterCard to pay back the victims a large compensation for the violation of law of the financial information disclosure. According to the sentence, Visa has to pay off $740 million to all the victims in US. And MasterCard has to pay $60 million to the victim residents only in California.
The reason for this is that according to American rules, the sentence of the Supreme Bench of the state, where the company is registered, is spread on the whole territory of the country. And Visa is registered right in California. However, MasterCard should keep an alert too - the suit of the Supreme Bench of New York, where the company is registered, is on the way. At the same time the third largest payment system American Express is going to be suited too.
Payment systems evidently didn't like the court decision. In their vindication they stated that their exchange rates are lower than other banks' rates and that 1% fee is more than a reasonable rate. The judge agreed with those arguments but considered that the information hiding is a violation of law. But the second argument of payment systems is that people demand more transparence from them than from other companies. The court didn't accept this argument. And now Visa and MasterCard are waiting for the opinion of appellate litigation. Most of the analysts of American editions believe that payment systems will hardly manage to get off the payments.
This case may seem ridiculous. The contract contained the information on the conversion fee rates (even though in fine print). And the customer signed this contract. So what is the question? The problem is that they didn't inform customers about this fee in every particular case.
