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Capital One defeats cardholders’ lawsuit over foreign exchange charges
By Jerry
March 4 (Reuters) – A federal judge in Virginia on Monday dismissed a lawsuit accusing Capital One (COF.N), opens new tab of overcharging credit and debit card customers on transactions made in foreign currencies.
U.S. District Judge Patricia Tolliver Giles in Alexandria said cardholders in the proposed class action did not identify language in their card agreements that was “clear and unambiguous” about what rates and fees Capital One would impose.
Four plaintiffs said Capital One sought to maximize profit by charging “fictional” rates when it converted foreign currency transactions into dollars.
They said the McLean, Virginia-based bank ignored rules set by card processors Visa (V.N), opens new tab and Mastercard (MA.N), opens new tab that it use wholesale market rates or government-mandated rates.
The plaintiffs said this also boosted profit on transactions in which cardholders pay a percentage of the transaction, typically 3%, as a fee.
The judge said the plaintiffs failed to show that their card agreements incorporated the processors’ rules, or created an “objectively justified expectation” that their exchange rates would resemble those incurred by Capital One or the processors.
“Plaintiffs have failed to plausibly allege facts sufficient to state that defendants breached a contractual duty owed to plaintiffs through defendants’ own conduct or the processors’ conduct,” Giles wrote.
