An appeals court in Illinois recently threw out a case against American Express regarding the way that AmEx discloses foreign transaction fees — or does not disclose as the case may be.

The trial court granted the defense summary judgment motion because plaintiff had no evidence that Amex represented the $3 transaction fee to be its net profit, id., at 14-15, and because plaintiff failed to prove that he suffered any damage, id., at 17. The appellate court affirmed.

The class action complaint alleged that, in addition to the posted $3 service fee for each currency exchange, Amex profited from the “float” between the rate it paid for the foreign currency and the rate at which it sold the currency. Sanchez, at 2-3. The appellate opinion quotes from the class action complaint at page 3 as follows: “In addition to profiting by charging each of its customers a ‘fee’ for the [foreign currency exchange service], American Express also profits by skimming the difference between the exchange rate it receives and the exchange rate it uses to convert a customer’s currency. The difference between the two exchange rates is a hidden, undisclosed charge it assesses to each of its customers that use the Service (hereafter ‘the Money Skimming Scheme’).” [read more...]

Several of our readers have complained that they often find American Express charging more than the 2% they claim to charge in their fee disclosures. I’ve also written about this discrepancy here. By looking at an AmEx statement after making foreign purchases and calculating the fee charged, I’ve found that American Express has a tendency to charge 1% more than the wholesale rate. This often makes the total fee charged by American Express for foreign transactions to be be 3% or more.

American Express claims that the rate they charge is: “(a) the highest official conversion rate published by a government agency, or (b) the highest interbank conversion rate identified by us from customary banking sources, on the conversion date or the prior business day….” As many customers find, AmEx is very good at finding the highest rate possible to charge customers with. The problem is, that AmEx doesn’t necessarily purchase the currency they are selling at the “highest official conversion rate.”

As the lawsuit alleges, American Express actually does a pretty good job of purchasing currency at a low rate. Hidden fee or not, this lawsuit confirms that American Express credit card users can end up paying more than the 2% they thought they were for foreign purchases.

A new, no frills discount airline Skybus is operating in the United States and selling flights for less than $10 a ticket. For such a cheap ticket there are a few catches of course: no food, limited amounts of checked luggage, no assigned seating, and all flights route through Columbus Ohio. The concept will be immediately familiar to anyone who’s traveled on a similar discount airlines in Europe. For European airlines such as EasyJet and RyanAir it’s not uncommon to get flights for as little as for €1 or £1. If you’ve traveled on one of those airlines you know what I mean when I say don’t expect the same level of ’service’ you’ve been receiving on other airlines.

For example, with Skybus, there is no toll-free number for you to call. In fact, there’s no phone number at all. Email only. According to their FAQ page here’s what to do if you have a complaint:

We’d love to hear from you. You can send us a message by filling out the form that’s on our Contact Us page. We can’t guarantee a personal response to your message, but rest assured it will be delivered to a real Skybus employee.

In other words, they’ll read it, but you’ll probably get an automatic reply. Here are a few more caveats:

In flight entertainment? “Bring a book”
Canceled Flight? You’ll get a refund.
Delayed? “Don’t be Late. We won’t wait and we’ll leave without you.”
Hungry? Eat before you leave. “Don’t Sneak Food Onboard.”
First Class Seating? Pick your own seat. $10 to get to the front of the line.

Anyway, it’s entertaining reading even if you’d never fly with them. And for some people wanting what the Europeans have had for years, it will be perfect. Rumor has it that Skybus sold 97,000 seats on the first day of this offer alone.

Slowly but surely more and more news outlets are beginning to cover the details about the recent class action lawsuit brought against several major credit card companies over how they charged foreign transaction fees. That’s good for those who don’t know about settlement because, if this site is any indication, many consumers are still unaware that they might be eligible to receive a refund for any fees they may have paid to these credit card companies while traveling internationally.

KOMO TV out of Seattle, Washington, reported yesterday that consumers will continue to be notified about the lawsuit through various means over the coming weeks:

First notification of the settlement went out last month as inserts in card holder’s statements. Sweeney says stand-alone notices will be mailed in the next couple of months to cardholders who do not get a regular monthly statement. Additionally, Sweeney says public notices are planned for various travel publications and major national news publications, such as the Wall Street Journal and USA Today. [read more...]

From the sounds of things, there are still a significant number of people who have yet to hear about their refund opportunities. However, there may be one drawback. KOMO reports that “actual refunds will depend upon final approval by the court, and on the number of valid claims filed. Final approval is scheduled for Nov. 7 in New York. Plaintiff’s attorney Bonny Sweeney of San Diego tells me the refunds could range from 1% to 3% of your total transactions — or possibly more.”

“It will depend on the number of claims, when you used the card, and which credit card you used because the fees were different at different times,” Sweeney explained by telephone.

One might assume that the more claims received, the less of a refund consumers will receive. Even more interesting is that refunds might be higher than 3%. Since few companies charged more than 3%, the refund could exceed the actual fee paid. For those of us who have already completed our refund applications, getting the word out to more people about the lawsuit will likely reduce the refund we receive. But keeping my mouth shut defeats the whole purpose of this site!