In the latest round of an ongoing lawsuit over fees charged for credit card purchases made overseas, Visa and MasterCard have told the California judge who told them to refund the fees that they cannot because they haven't retained enough information about who paid them, and it would violate privacy rules to obtain it.
In turn, the judge, Ronald M. Sabraw of the Superior Court of California, County of Alameda, gave the plaintiffs' lawyers permission to conduct 10 more depositions to find out whether Visa and MasterCard have the necessary data to return the money, and how difficult it would be. All parties must return to court this month to report on their progress.
The situation recalls the time in 2000 when the Internal Revenue Service tried to force MasterCard and American Express Co. to produce records about credit card use by U.S. citizens with offshore bank accounts. The companies took more than a year to release the data, which the IRS then combined with merchant records to come up with the names of people to investigate for tax evasion.
In this latest case, Judge Sabraw ruled on April 7 in favor of plaintiffs who complained that a 1% currency conversion fee charged by Visa International, of San Francisco, and MasterCard International, of Purchase, N.Y., was intentionally concealed from consumers. He ordered Visa to make restitution on purchases since Feb. 15, 1996. He ordered MasterCard to do the same, but only in California, because it is not headquartered in the superior court's jurisdiction. Estimates of the refunds range from $600 million to $800 million.
Visa and MasterCard both filed briefs in May arguing that the data to make restitution may no longer exist. Visa further argued in its brief that refunding the fee would cost so much that recipients would end up receiving a "windfall" at the expense of "increased charges on Visa members, which ultimately will be passed on to future cardholders in one form or another." Visa argued that the only way it could electronically refund currency conversion fees would be to work with data from card issuers and processors, and that the work would likely "take two years or more, and in the end undoubtedly will be incomplete and often inaccurate."
Both Visa and MasterCard fought against offering more experts, saying the time for depositions was long past. They also say that the depositions will not do the plaintiffs any good.
"We just don't have this data in terms of individual cardholders," said Sharon Gamsin, a MasterCard spokesperson. "It would be up to the members to go back and find it. It would be prohibitively expensive."
She compared the situation to the IRS investigation of tax cheats, which had the tax agency sifting through more than a million MasterCard transaction records. Visa's brief called the whole idea of a large-scale refund of no benefit to the general public.