Reclaiming 'foreign transaction charges'

JASONH_4-2

I have read some previous discussion on this topic in the forums with the general concensus seeming to be that there is little chance of reclaiming these as they are not penalty charges and are not that 'unfair'. My personal feeling is that they are unfair as the charges are concealed in loaded exchange rates and quite frankly it's difficult to ascertain what and when you're being charged.

I have an MBNA Mastercard. On the back of the statements it says in the smallprint about charges:

"Overseas transactions - 2.75%, rounded up to the nearest penny, commission charged on all non-sterling transactions. Any charge levied will be displayed on your statement. "

They are absolutely not displayed on my statement - I just see the foreign currency amount, exchange rate applied and £ amount debited.

I did a bit of rooting around on the net and came across this forum posting in the US

http://www.bradsbits.com/2007/02/22/foreign-credit-card-transaction-charges-reimbursed/

In short, it talks about a class action against credit card companies in America for 'conspiring to set and conceal fees' and that Visa/Mastercard inflated their base exchange rates before applying the fees (for a decade). Most interestingly it goes on to say that the defendants have agreed to set up a settlement fund and gives a link to a claim form.

It's American for Americans but if the credit card companies ( including MBNA listed ) are up to no good in the US surely there is more than a slight suspicion they have been carrying on the same practices here? It's the same global players in both markets.

I'm new to this so is there someone with their finger closer to the pulse who can confirm if this US action is legit and if it could be the golden bullet to fire at the card companies here? It could mean hundreds of pounds back for me as I travel frequently.

riad_2

It's HIGHLY unlikely you have ANY chance of claiming a foreign transaction loading charge! They aren't that hidden... they are in the T&C's and these fees are standard in the industry.

Where they differ from bank penalty charges was that the amount of penalty charges were seen to be unfair and unjustified. Hence the reduction of cc charges from £20 to £12... which is seen to be a fairer and more justified charge.

A foreign loading charge of 2.75%, I don't think any court will rule is unfair judging by the fact that commission charges of bureau's is around the same. MORE CRIMINAL is the "no commission" places like the post office who make up the money by selling at a much higher exchange rate! By incorporating the commission in this manner, to be honest *THIS* is the "HIDDEN" exchange rate/foreign exchange fee!! The credit card fee by comparison is quite transparent.

As you travel frquently, I would suggest you get a Nationwide or Post Office card as these don't have any loading charges.

Sorry to burst ur bubble... just tryin to be realistic :A

Biggles

riad wrote: »

MORE CRIMINAL is the "no commission" places like the post office who make up the money by selling at a much higher exchange rate! By incorporating the commission in this manner, to be honest *THIS* is the "HIDDEN" exchange rate/foreign exchange fee!!

I couldn't agree more.

I've tried hard over the last year or two to persuade both Martin and Which? that they should campaign to make it illegal to state 'No Commission' when, in fact, you are charging commission but hiding it. But I've had no sucess.

How many other businesses are there in which lying about your price to the customer is legal?

JASONH_4-2

To play devil's advocate with the bureau de change issue I suspect they would say you get exactly what it says on the tin when you go in there. They charge you 'no commission' and you get your currency exchanged at the rate clearly displayed on the large board you stare at while you are queuing up. If you don't like the rate you see you can turn around and go elsewhere.

With my credit card I don't get to see what rate they are going to apply before I make the transaction. Yes, the 2.75% loading is in the terms and conditions but presumably ( I'll risk a presumption ) American cardholders have the fees stated in their terms and conditions as well but ARE making a claim citing concealment. (If that stuff on the link is legit of course).

The T&C's I see on the back of my statement also say any charge will be displayed on my statement. As they are not is there any mileage in pursuing a claim from this angle? I think if I had seen the words 'charge' or 'fee' appearing a dozen times on my monthly statement I would have changed my payment method pronto.

Also in the American case there is the allegation that exchange rates were being adjusted to the cardholders' detriment even before the %fee was applied.

I have a Nationwide debit card which I use for cash withdrawls overseas. I have tracked down a few examples where I have used both cards on the same day, in the same foreign currency and compared the rates applied by each card provider. I have tried converting the MBNA Mastercard transaction at the Nationwide rate and then adding on 2.75% to see if it comes to the actual charge on my MBNA statement. In each case the actual MBNA amount debited is still higher. Maybe there is a more convoluted calculation in reality and I have only picked a small sample but maybe there is some truth to the US allegation. That would certainly be hidden charging / overcharging and rather 'unfair'.

OK, I very much doubt any card provider is going to fall over themselves to give me back my money and it would be difficult for me to prove they have been up to no good in front of a judge. I can't help wondering though that if the same companies are setting up a settlement fund in the US and sending out claim forms to their cardholders are they not therefore worried that a judge COULD rule in the cardholders' favour?

riad_2

It's not a fair comparison to compare the Nationwide and the MBNA card side by side in this manner as one is a Visa and the other is a Mastercard... hence the business exchange rate used on both will be different.

e.g. if you have a tesco visa AND a tesco mastercard... and put thru the same foreign transaction on each at the same time, the amount you get charged in sterling will be different as they both use a slightly different exchange rate. This doesn't necessarily mean that this is to the detriment to the customer, as the concept of a "business exchange rate" is that this will be the same rate when converting in both directions... (if that makes sense?).

I'm afraid I have yet to find where on the Visa and Mastercard websites they publish their daily business exchange rates though, as this would be useful information to see which product has a better rate trend if you're going to a particular country!

YorkshireBoy

JASONH wrote: »

The T&C's I see on the back of my statement also say any charge will be displayed on my statement. As they are not is there any mileage in pursuing a claim from this angle?

There are no T&C's on the back of the statement; these are contained within a separate document or your credit agreement. What you see on the back of the statement is 'information'.

According to the MBNA T&C's...

4b If you make* a transaction in a currency other than sterling, we will change the amount into sterling at the wholesale market rate or any rate that a government may set. We will charge a service charge (commission) of 2.75% of the value of each foreign-currency transaction rounded up to the nearest penny. Exchange rates may change, and the exchange rate which applies on the date that you make your transaction may not be the same as the exchange rate we use on the date that we convert the transaction charge and add the service charge to your account. The exchange rate shown on the statement will include this service charge.

* There's your choice. IF you choose to use the card, this is what they'll charge.

It's a service...avail of it and they'll charge you; don't use it if you're not happy with the terms.


At the end of the day though, isn't 'wholesale rate + 2.75%' still much cheaper than tourist rate from travel agents, Post Office, etc?

Biggles

JASONH wrote: »

To play devil's advocate with the bureau de change issue I suspect they would say you get exactly what it says on the tin when you go in there. They charge you 'no commission' and you get your currency exchanged at the rate clearly displayed on the large board you stare at while you are queuing up.

You know that. I know that. But a substantial majority of members of the public really believe they are being charged 'no commission'.

You pick someone out (not a subscriber to this board!) and ask how much the pay to change their money for Euros for their holiday. They'll say 'nothing'.

If what you say is true, nobody would be queuing at these BdCs, they would all be using credit or debit cards, especially Nationwide ones. But they are queuing.

happyinflorida

I used to work for American Express over 20 years ago and was friendly with the person who set the exchange rates to be used for the transactions. They told me that depending on the rate set, they could make millions for Amex in one day! So if profits were not looking good, the exchange rate was set at a higher ratio for them to make higher profits.
I expect it's still the same for all the banks, credit cards, etc today.

john_t_4

Just a slightly different angle on this......

We used an MBNA VISA card to purchase some equipment from a German Supplier - 2.75% applied - can't really argue with that......

However, some of the goods were not suitable and returned for a refund.

Yup, we got charged another 2.75% again on the refund.

Can they really charge us twice ?????