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Bank of America Visa, Mastercard Foreign Exchange Rates Class Action

The Internet has enabled US consumers to buy from foreign companies, using their US-based Visa and Mastercard credit or debit cards. But the complaint for this class action alleges Bank of America, NA violates its agreements in the foreign exchange rates it charges customers on their overseas purchases. The complaint claims that BOA does not charge customers the promised rate and that sometimes no currency has been exchanged at all.

The Nationwide Class for this action is all persons or entities with a Visa or Mastercard payment card with Bank of America, who made a transaction in a foreign currency using the card within the applicable statute of limitations, where the exchange rate imposed was not a government-mandated rate. An alternative California Class has also been defined, for cardholders living in California.

Visa and Mastercard do not themselves issue credit cards to consumers. Rather, they allow banks to issue them while they act as processors. They do, however, impose certain rules on the issuers and on the use of the cards. The complaint alleges, “These rules provide, inter alia, that the foreign exchange (‘FX’) rates applied to consumer payment card transactions in foreign currencies for each day will either be wholesale FX market rates or a government-mandated rate. The vast majority of jurisdictions do not have government-mandated rates.”

BOA passes these terms on to customers with its agreements, the complaint alleges, “promising their cardholders … that the FX rates applied to foreign transactions will be either wholesale market rates or, in jurisdictions that have them, government mandated rates.”

Yet the complaint contends that “the FX rates applied to FX cardholder transactions do not represent rates available in the wholesale FX market.” And it makes another allegation: “Further, even when the FX rates imposed by Visa and Mastercard are within the trading ranges of the individual currencies within the wholesale market for the applicable dates, the methods by which the rates are imposed are unfair, in bad faith, and therefore in violation of the Credit Card Agreements.”

Cardholders believe that the rates charged for FX have some connection to the rates the card processors and banks themselves pay when processing the transactions. However, the complaint says this may not be true: “In fact … the banks and Processors rarely engage in wholesale market transactions to facilitate the cardholders’ transactions.” They are instead settled in US dollars. “In these instances, the need for any currency conversion is a pure fiction, and any hidden charge for the same, and/or the manipulation of FX rates in breach of the Credit Card Agreements, is unlawful.”

Even when they are settled in foreign currencies, the complaint claims that “the need for currency exchange is minimal. The Processors are engaged in multilateral global transactions on a massive scale (i.e., doing multiple transactions in both directions—e.g., U.S. Dollars to Euros, and Euros to U.S. Dollars).” The processors therefore only need to exchange currencies for settling remaining net amounts.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Bank of America Visa, Mastercard Foreign Exchange Rates Complaint

July 9, 2021

The Internet has enabled US consumers to buy from foreign companies, using their US-based Visa and Mastercard credit or debit cards. But the complaint for this class action alleges Bank of America, NA violates its agreements in the foreign exchange rates it charges customers on their overseas purchases. The complaint claims that BOA does not charge customers the promised rate and that sometimes no currency has been exchanged at all.

Bank of America Visa, Mastercard Foreign Exchange Rates Complaint

Case Event History

Bank of America Visa, Mastercard Foreign Exchange Rates Complaint

July 9, 2021

The Internet has enabled US consumers to buy from foreign companies, using their US-based Visa and Mastercard credit or debit cards. But the complaint for this class action alleges Bank of America, NA violates its agreements in the foreign exchange rates it charges customers on their overseas purchases. The complaint claims that BOA does not charge customers the promised rate and that sometimes no currency has been exchanged at all.

Bank of America Visa, Mastercard Foreign Exchange Rates Complaint
Tags: Breach of Contract, Credit Cards, Foreign or International Transaction Charges