Released: April 16, 2003

Consumer Action sues American Express

Contact: Ken McEldowney or Linda Sherry, (415) 777-9648

Class action centers on company's failure to disclose credit card foreign currency exchange charges

April 16, 2003 - Consumer Action is a lead plaintiff in a class action lawsuit against American Express charging that the company did not properly disclose foreign currency exchange fees to its California cardholders. The suit, filed in late March in Alameda County (CA) Superior Court, centers on the company’s 2% fee for all charges made by cardholders in foreign currency. The suit argues that the company fails to reveal the fee on cardholders’ billing statements and instead "embeds" the charge in the overall transaction amount shown on cardholders statements in U.S. dollars.

Download the 18-page complaint as a PDF file.

"We’re asking American Express to break out the fee on customer statements and to implement rebates for any currency conversion fees charged to cardholders from March 2001 to the present," said Ken McEldowney, executive director of Consumer Action.

Consumer Action, in its annual national Credit Card Rates Survey, has tracked the fees for several years and has attempted to publicize the existence of currency conversion charges to the public - and the fact that the fee is not broken out on credit card statements. "Unless credit card companies include a separate line item for the charge, most consumers will never know about it," said McEldowney. "And the secretive nature of the fee makes it unfair and deceptive."

The lack of disclosure of MasterCard/Visa currency conversion fees has prompted other lawsuits around the country. In March, a ruling in a California suit, Adam A. Schwartz vs. Visa International, upheld the plaintiff’s charge of deceptive practices under California law and ruled that the card networks should have required that their member banks openly disclose currency conversion fees. Under the ruling, MasterCard and Visa have been ordered to give rebates for the fees they collected from people who used their cards abroad since February 1996. Plaintiffs’ attorneys estimate the total for the rebates at $500 million to $800 million.

American Express is not part of the MasterCard/Visa network - it’s 2% currency conversion fee, which was increased from 1% in mid 1999, is charged to all American Express, Blue, Optima and Delta Skyline cardholders who make charges in foreign currency.