You may be due a refund of card fees

PERSONAL FINANCE

January 29, 2008|By EILEEN AMBROSE

Credit card issuers send out a lot of notices, and you probably throw most of them out as soon as you spy the tiny print.

But if you got a notice from the "U.S. District Court Settlement Administrator," it's not only worth reading, but filling out.

More than 30 million notices have been sent to credit and debit card customers who are eligible for a refund for fees paid when using a Visa, MasterCard or Diners Club card to make purchases and ATM withdrawals outside the United States. Refunds can be $25 or higher.

The refund is part of the settlement of a class action lawsuit filed years ago. The lawsuit claimed, among other things, that Visa, MasterCard, Diners Club and certain banks hid foreign exchange fees from customers. The fees typically ran from 1 percent to 3 percent.

Visa, MasterCard, Diners Club and the banks denied wrongdoing.

The settlement calls for card companies and banks to set up a $336 million fund to return fees to consumers. To be eligible, you must have paid the fees on foreign transactions from Feb. 1, 1996, to Nov. 8, 2006.

You don't need to have traveled outside the country during those years to be eligible, says Merrill G. Davidoff, one of the lawyers for the plaintiffs. You may get a refund if you bought products online during that time and paid in a foreign currency, he says.

A previous settlement notice was sent out many months ago with card statements, but the judge and others were concerned that customers might throw out the notices as they do other card materials, Davidoff says. This new settlement form mailed late last year allows you to claim a refund under one of three methods:

A flat $25 refund. This is recommended if your foreign transactions were less than $2,500.

Total Estimation Refund. It's based on 1 percent of your typical spending during travel. This is a good option if you were out of the country for more than a week or spent more than $2,500 on foreign transactions. You'll need to answer a few questions on your travels.

Annual Estimation Refund. Refunds will range from 1 percent to 3 percent of foreign transactions. This method is best if you traveled extensively or have had large foreign transactions. You'll need to supply many more details. Corporate card users must file under this option.

You can fill out the form and mail it in or submit a claim online at www.ccfsettlement.com.

The deadline to claim a refund is May 30. So far, 7 million claims have been filed, Davidoff says. It may take up to 18 months to receive a refund, he says.

If you're eligible for a refund, you can thank Bob Ross. He was one of the first consumers to challenge card companies on these fees in the late 1990s.

Ross, now retired and living in suburban Philadelphia, used to sell software and travel overseas on business. When filing expense reports for an employer that counted every penny, Ross says he couldn't reconcile his receipts, the exchange rates and credit card statements. "I couldn't get the numbers to add up," he says.

The same thing happened when he would take family vacations in Europe, he says. What he thought he was paying was always less than what he ended up paying, Ross says. His bank gave him the runaround. So he took his findings to a lawyer.

"Most people aren't [foreign exchange] traders," says Davidoff, Ross' lawyer. "Bob Ross is a hero."

Others around the country also noticed the discrepancy, the lawyer says. More lawsuits were filed.

Davidoff figures that the refund for Ross and his family will range from $300 to $900. The amount the Ross family receives could be less, depending on the number of claims filed, the lawyer says.

Some of the companies involved in the case say they're glad that it's settled and behind them.

"Although we deny any liability regarding our prior practices, the company believes this settlement is in the best interests of our customers and shareholders to avoid the inconvenience, expense and uncertainty of litigation," says Samuel Wang, a spokesman for Citigroup, which owns Diners Club.

MasterCard spokeswoman Sharon Gamsin adds, "There was never any dispute that using your MasterCard card for purchases when you travel overseas gives you the best value on currency conversion."

Card issuers now disclose foreign transaction fees, which still can run as high as 3 percent.

Before traveling out of the country, shop around for a card that imposes a small foreign transaction fee or none at all. Foreign transaction fees are disclosed in the terms and conditions.

Credit.com, an online provider of card information, posts terms of many cards on its site at www.credit.com.

Questions? Comments? Or to share a tip with readers, contact Eileen Ambrose at 410-332-6984 or by e-mail at eileen.ambrose@baltsun.com

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