Navy Federal Credit Union Foreign Fees for Online Purchases Class Action

Is a transaction by an American in the US at a foreign website a foreign transaction? Should it be subject to the additional International Service Assessment Fees (ISAF) charged by banks and other credit or debit card companies for foreign transactions? This class action, against Navy Federal Credit Union (NFCU) says no.

The Nationwide Class for this action is all NCFU checking accountholders who, within the applicable statute of limitations, were charged an International Service Assessment Fee for an Internet purchase made from the US. There is also a California Class for NFCU checking accountholders in California.

NFCU’s standard account agreement, which includes its Schedule of Fees and Charges, govern its checking account and debit card services. The Schedule permits NFCU to charge a “15 per transaction” ISAF to “[p]oint-of-sale and ATM transaction made in foreign countries.”

However, the complaint alleges, “nothing in the Schedule or any other NFCU checking account document authorizes NFCU to apply the 1% ISAF to online purchases made from within the United States. In fact, the Schedule’s prohibition of such charges is confirmed by NFCU’s website and debit card disclosures… At the very least, the Schedule is ambiguous as to whether ‘transactions made in foreign countries’ means in-person transaction[s] made on foreign soil.”

Plaintiff Siobhan Morrow lives in San Diego, California and has a checking account with NFCU.

At some time around July 9, 2020, Morrow used her NFCU checking account to spend $137.56 at Chicme.com, an online women’s clothing retailer based in Cyprus. She was in San Diego at the time, and the complaint alleges she was not aware that the retailer was outside the US.

NFCU charged her an ISAF of $1.38 for the purchase. The complaint claims that NFCU was not entitled to charge her any ISAF because the purchase was made in the US.

While the complaint acknowledges that such fees seem to be very small, taken individually, it claims that, taken together, they add up to a considerable amount. A multidistrict litigation was filed in 2001 called In Re: Currency Conversion Fee Antitrust Litigation, MDL No. 1401. That complaint “alleged that credit card agreements and statements poorly disclosed international transaction fees and that credit card companies colluded in fixing the fees at an inflated amount.”

According to this complaint, the 1% currency exchange charges earned Visa International $424 million in 2004, which was nearly 30% of its revenue for the year. Some banks charged an additional fee on top of the Visa fee. The case resulted in a $336 settlement in 2006 for over 10 million customers.

Although this case does not concern the same kinds of charges, the complaint alleges that the ISAF charges are assessed on “unsuspecting” customers.

The complaint alleges breach of contract and breach of the implied covenant of good faith and fair dealing, among other things.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Navy Federal Credit Union Foreign Fees for Online Purchases Complaint

August 21, 2020

Is a transaction by an American in the US at a foreign website a foreign transaction? Should it be subject to the additional International Service Assessment Fees (ISAF) charged by banks and other credit or debit card companies for foreign transactions? This class action, against Navy Federal Credit Union (NFCU) says no.

Navy Federal Credit Union Foreign Fees for Online Purchases Complaint

Case Event History

Navy Federal Credit Union Foreign Fees for Online Purchases Complaint

August 21, 2020

Is a transaction by an American in the US at a foreign website a foreign transaction? Should it be subject to the additional International Service Assessment Fees (ISAF) charged by banks and other credit or debit card companies for foreign transactions? This class action, against Navy Federal Credit Union (NFCU) says no.

Navy Federal Credit Union Foreign Fees for Online Purchases Complaint
Tags: Additional charges in breach of contract, Foreign or International Transaction Charges, Your Bank