OAKLAND, Calif. (AP) _ Visa and MasterCard customers could get $500 million if a state judge holds firm that the credit card companies must refund a fee they tack on to foreign-currency transactions.
In a preliminary decision that remains under seal, Alameda County Judge Ronald Sabraw ruled that the companies' member banks have not properly disclosed the 1 percent fee, according to parties on both sides of the dispute.
Though Sabraw said the fee _ which credit card companies say covers the cost of providing service overseas _ is legal, he ruled that it must be better explained and disclosed. He also ruled that because it had not been properly disclosed, the companies should refund the fee dating to 1996, four years before the suit was filed.
The suit is in state court, but because Visa International Inc. and Visa USA Inc. are based in Foster City, Calif., any judgment could apply to Visa cardholders nationwide. MasterCard is based in New York, so any final ruling could apply only to cardholders in California.
``It's important that consumers know what they're being charged,'' said lawyer Patrick Coughlin, who sued the credit card firms on behalf of a customer.
The total refund could hover around $500 million, based on estimates by Coughlin's law firm. MasterCard would be responsible for up to 20 percent of that payment.
The two companies earned a total of at least $240 million last year from foreign-exchange fees from cards issued in the United States, according to the industry newsletter the Nilson Report.
Officials with both MasterCard and Visa have lambasted the preliminary ruling and said they would appeal.
``Visa pioneered today's currency conversion system that protects consumers from exorbitant rates when traveling abroad,'' said Stephen C. Theoharis, a senior vice president with Visa USA. ``In essence, the court is penalizing Visa for offering consumers the best deal in town.''
Sabraw issued his decision last week. The case is next scheduled for his court March 4.