NEW YORK --
American Express settled a class-action lawsuit and will refund
card holders portions of certain transactions in foreign
currencies, including travel-related purchases.
In addition, under
the terms of the settlement, Amex will change the way it discloses
the conversion fees it charges.
Amex denied any
wrongdoing in the settlement, which is up for final court approval
in March. Amex contended that its currency-conversion policies were
adequately disclosed in card-member agreements.
However, the
company agreed to refund card holders $30 million to $75 million,
pay attorney fees and other settlement costs, and begin disclosing
currency-conversion fees in card statements.
In a separate case,
Visa and MasterCard are appealing a California court ruling last
year that they did not adequately disclose currency-conversion
fees.
In LiPuma v.
American Express, the plaintiffs charged that Amex did not
adequately disclose the 1% to 2% fee it tacked onto
foreign-currency conversions.
Edward LiPuma, an
anthropology professor at the University of Miami in Coral Gables,
Fla., filed one of the suits that was consolidated into the
class-action complaint. He travels extensively and realized that
Amex was charging him fees related to foreign-currency conversions
that were not broken out in his card statements.
Frank Janacek Jr.,
a plaintiff's attorney in San Diego, noted that the settlement
applies to some American Express card holders who made overseas
purchases in foreign currencies, and that the "bulk of the
purchases were travel-related."
So, card holders
may be entitled to a refund if they used their card to pay a hotel
bill in France or for a dinner in Portugal, for example.
Janacek said the
settlement also applies to customers who may have used the card in
the U.S. to buy a case of wine in Italy if the transaction was in
foreign currency.
"The main theory of
the case was a lack of disclosure," the attorney said. "The
statement didn't itemize the fees but just provided one lump
sum."
The settlement
applies to American Express only, but other credit card companies
and issuers should be aware of the issues and be "forewarned," said
Janacek.
An American Express
spokeswoman said the company will begin disclosing
currency-conversion fees in customers' statements.
For now, though, a
consumer FAQ on AmericanExpress.com states: "Your credit or charge
card company will convert charges to the appropriate currency
before it appears on your statement. ... Most card issuers charge a
currency-conversion fee that may be added to your bill with each
foreign purchase."
The spokeswoman
said the settlement will not impact travel agencies.
Amex recently sent
a notice to card holders, instructing them to file a claim to
determine if they qualify for a refund. Customers who used their
card for transactions in foreign currencies from March 28, 1997, to
Oct. 15, 2004, may qualify for reimbursement, including the
conversion fees.
Card holders who
made purchases in Turkish lira may be eligible for more refunds
than for other currency charges, according to the settlement,
because Amex allegedly used "rounding-up" practices in some of the
conversions of Turkish lira.
Amex noted last
year that it established reserves to reimburse card-holders and pay
attorney fees.
Claim forms can be
accessed at www.lipumasettlement.com.
To contact
reporter Dennis Schaal, send e-mail to [email protected].