Monday, 11 February 2008

Money for travellers from class action lawsuit

If you are from the USA, and reading this blog, you are probably eligible to get some money from a class action lawsuit you might not have heard about.

You can get at least $25 for the asking (and maybe many times more) if at any time between 1996 and 2006 you used a card with a Visa or MasterCard logo to make a purchase or withdraw money from an ATM in any country other than the USA (yes, including Canada and Mexico) and/or in any currency other than US dollars.

To get your money, you need to file a claim by 30 May 2008. If you do nothing, you’ll get nothing. (The Web site for filing claims looks like a “phishing” scam. But I’m pretty certain it’s legitimate.)

Start working on your claim now. It might be simple, but it might take some time to get the necessary information, particularly if you are on the road or abroad now.

You can file a claim online for your choice of either:

  1. A minimum of $25, regardless of how much you spent (as long as you spent anything at all on any Visa or MasterCard outside the USA or in foreign currency)

  2. An estimated amount based on the number of days you have spent outside the USA from 1 February 1996 through 8 November 2006

  3. An amount based on your total documented charges outside the USA and/or in foreign currency with Visa and MasterCard credit, debit, and ATM cards during that period, if you can show your recrods of those charges

If, like most people, you don’t have complete records of your credit card bills for the last 12 years, and if the money is fairly allocated (it might not be — more on that below), most people who’ve spent a cumulative total of a month or more abroad should get the largest refund with the least effort to prepare their claim under Option 2.

Under Option 2, you’ll get an “estimate” of 1% of your total spending abroad. I’m guessing that might be as much as dollar for each day you spent abroad. If you took a year-long trip around the world in the last decade, or lived abroad for a year, you might have several hundred dollars coming!

You might have gotten a fine-print notice in the mail about this. (I didn’t, because I’m travelling and receive my bills online.) But if you didn’t get it or threw it away, don’t worry; You don’t need the notice to file a claim.

To file a claim under Option 2, you need:

  1. The card number and name of the issuing bank for any one Visa or MasterCard that you used abroad and/or for a purchase in foreign currency between 1 February 1996 through 8 November 2006

  2. The cumulative total number of days you spent outside the USA during that time

It doesn’t matter how many cards you had, whether they are still active, how much you actually spent, or whether you took 10 trips of 10 days each, or 1 trip of 100 days. You just need the card number and name of the issuer for one card you are sure you used at least once while abroad or with a foreign merchant, and the total number of days you were abroad.

So go file your claim. Now.

Back already? Good.

Now that you’ve filed your claim, here’s more about what’s happened, what’s still wrong, what I’m doing to try to get it fixed, and what you can do to help:

Banks and credit card companies charge currency conversion fees when you make purchases or withdraw money from an ATM in a currency other than the one in which you are billed (almost always US dollars, if your cards are issued in the USA). Those fees are typically no more than half what retail money-changers charge to change money between currencies (with a lot of variation between banks), so it is usually a pretty good deal.

But for years, banks in the USA have been accused of conspiring to fix those fees, and of hiding them from consumers rather than itemizing them clearly.

(Similar things happen with ATM fees when you use your cards abroad. My bank promises to reimburse other banks’ fees for using their ATM’s. They do, automatically, when I use other bank’s ATM’s in the USA: But when I’m abroad, the fees are rarely itemized on my statement, or reimbursed automatically. Every few months while I’m abroad I have to call my bank to get them to research and credit the latest batch of ATM fees from foreign banks.)

Eventually, a bunch of people sued the card-issuing banks, Visa, and MasterCard. (And Diners Club, which is also included in the settlement, although I don’t know many people who use it.)

The banks don’t admit they did anything wrong, but they’ve agreed to fork over a third of a billion dollars to cardholders (and the lawyers who brought the suit) to settle these claims.

So far, so good.

The problem is is figuring out how to divvy up the pot. Most people don’t keep complete credit card billing records and bank statements that old, especially for closed accounts. And people living and travelling abroad are among those least likely to have kept, or to have immediate access to, those sorts of records.

So the proposed settlement includes Option 2, which is intended to estimate how much you spent by credit, debit, or ATM card abroad, based on answers to a few simple questions.

Still so far, so good.

The problem is in choosing which small number of simple, easily answered questions will provide the best basis for an estimate, and determining what algorithm will best translate the answers to those questions into fair estimates and a fair allocation of the settlment among the millions of claimants.

That’s a difficult task, calling for considerable research into travel and traveller demographics, segmentation, and spending and payment method patterns. Not easy, but the lawyers are asking for more than $75 million of the settlement money. For that, they should have been able to afford plenty of help from travel experts.

Unfortunately, the lawyers have little reason to care how the remains of the settlement are divided up, once they have taken their $75 million off the top. (The 20 named plaintiffs don’t have much reason to care, either: they each get an average of $17,500.) And they appear neither to have, nor to have hired, anyone competent to devise a fair algorithm or allocation plan.

The settlement Web site mentions (deeply buried) the existence of the Option 2 algorithm, but says nothing about what it is. So in order to figure out how much I would get under Option 2, and whether it would be worth the effort and expense to make an Option 3 claim (which requires complete records of all claimed bills and charges), I wrote to the lawyers representing me and all the other members of the class of cardholders, to get them to tell me the algorithm and post it online for everyone who needed it to prepare their claim.

To my surprise, the lawyers’ eventual answer (after repeated written and telephone follow-ups over several weeks) was that not only has the algorithm not yet been determined, but they had no information at all on which I could base even an informed guess as to what it might eventually be determined to be! If that’s true, it means that it’s impossible to predict whether the settlement allocation will be fair. (And if it’s false, it means the lawyers are lying to, and withholding essential information from, their clients. For this they deserve $75 million?)

Worse, the “advice” they tried to give me was patently wrong, and betrayed naive (and wrong) assumptions and a complete lack of understanding, much less expertise, about the different types of travellers, travel behavior, and travel spending and modes of payment.

Looking more closely at the Option 2 claim form, and the lawyers’ advice, it became apparent that the settlement allocation would likely be systematically unfair. My detailed analysis is in the formal objections I’m submitting to the Court that has to decide whether to approve the proposed settlement, allocation plan, and lawyers’ fees. But my conclusions about the nature of the unfairness, as stated to the Court, are as follows:

Those with the largest claims are, of course, those who have lived abroad or travelled abroad for extended periods. Those likely to benefit unfairly from any algorithm based on the questions on the Option 2 claim form (which asks only about cumulative time abroad and trip purpose) are those who paid for few of their costs with merchants abroad with their personal US-issued cards. These would include particularly large numbers of those sent abroad by governmental or large corporate sponsors: military personnel on bases overseas and oil and gas workers on closed worksites, with few opportunities for local spending abroad; those living abroad in other government- or employer-paid housing; and those able to open bank accounts abroad from which to pay living expense while abroad (which is usually difficult without assistance, most often that of a corporate employer)

Those likely to be unfairly disadvantaged by the same algorithm are those who travelled or lived abroad on their own, who typically find it impossible to open a local bank account, cannot carry cash or travellers’ checks sufficient for an extended stay, and of necessity pay almost all of their expenses either with US-issued cards or with local currency withdrawn from ATM’s abroad with US-issued cards, often Visa- or MasterCard-branded.

Whether people were abroad under government or corporate sponsorship and employment, or on their own, thus may be a better indicator of foreign currency card usage than whether they were abroad for business or pleasure.

If you want to join me in objecting to the proposed settlement, you can do so without a lawyer (or with a lawyer, but it isn’t required) by mailing a letter to the Court and the two lead lawyers for the class , with your letter postmarked by this Thursday, 14 February 2008. [Note that this date has been corrected — there was a typo in the original version of this article. The correct deadline for objections is 14 February 2008.] If you don’t want a third of a billion dollars, in which you share an interest, to be divided up in a completely secret, unpredictable, and probably unfair way, ask the Court to postpone its approval of the settlement, allocation plan, and award of attorneys’ fees until the algorithm for Option 2 is disclosed to the members of the class, and can be evaluated for fairness.

A Federal District Court judge in New York City is scheduled to hold a hearing on Monday, 31 March 2008 on whether to approve the proposed settlement. Anyone can attend, but if you want to speak, you have to include a notice of your intent to appear with the letter stating your objections. I don’t expect to be able to attend the hearing myself (I expect to be in the air, on a flight between Cairo and Dubai), but if any of my readers can attend, I’d love to hear what happens.

[Correction: Thanks to everyone — including someone at one of the law firms for the class — who pointed out the typo in the deadline date for objections in the original version of this article as posted online and to my e-mail newsletter last night. The version above has been corrected.]

[Update: As I noted in my original article, and as several readers correctly pointed out, the Web site for filing claims looks exactly like a scam site “phishing” for personal data for identity theft, and to file a claim online you have to enter your Social Security number and credit card number. Pretty scary. I should have noted that there is an option to file your claim by mail, which is much more secure. More importantly, the fact that the claim site is indistinguishable from a “phishing” site is indicative of gross negligence and/or gross incompetence on the part of its designers, and reinforces my grave doubts as to the competence and diligence of the lawyers in looking out for the interests of class members. I should also have made more clear that you can both make a claim (by mail or online) and object to the proposed settlement. If the proposed settlement is approved, those who don’t make claims will get nothing. If you are going to object, though, you need to do so right away: objections must be filed with the court in New York by this Thursday, 14 February 2008. You have until 30 May 2008 to file a claim.]

[Further update, 18 March 2008: The lawyers for the class have filed their reply (see pages 19 and 22 of the 61-page PDF file) to my and the other objections to the proposed settlement. At least three other objector went to the not-inconsiderable effort and expense of filing a formal objection to approval of the settlement while the Option 2 refund algorithm remains unknown. According to the reply brief:

Four class members object that the algorithm which will be used to calculate Option 2 claims is not described sufficiently in the notice. As discussed above, the refund options provide a basis for the average class member to estimate the recovery based on the option they choos. [This is entirely untrue: This is exactly what the options don’t do, and what the lawyers’ refused to provide, even when it was specifically requested. - EH] Importantly, the algorithm is being developed by the Court-appointed Special Master based in part on actual claims data, and is not yet finalized….

Objectors Hasbrouck and Jou focus on the alleged vagueness of Option 2. Their objections, however, attempt to micro analyze the process and create needless complexities that will confuse class members and demand a level of exactness and precision that is not feasible in this context. Simply stated, option 2 claim refunds will be calculated based on information obtained from government travel statistics, claims data in this case, and sample data provided by Bank Defendants. While this process will necessarily deal with averages, median amounts and spending habits of many people, it is fair and resonable. Under the law that is all that is required.

Actually, I didn’t object to the “vagueness” of the Option 2 algorithm: I objected to (1) its likely systematic unfairness (in favor of certain identifiable and distinguishable sub-groups within the class, and against the interests of other sub-groups), (2) the lawyers’ withholding from class members who specifically requested it — i.e. their clients — of whatever information they have about the likely algorithm, and (3) the award of fees to the lawyers, while they are engaging in professional misconduct and breach of their fiduciary duty to their clients by withholding information known to them, which their clients need to know in order to determine whihc option is in their best interest. The lawyers’ reply entirely ignores all of my actual objections, while nonetheless asserting conclusorily — on the basis of information kept secret from their clients, if there is any basis for the assertion at all — that the as-yet-undetermined algorithm will necessarily be fair. And it continues to claim that government (airline) travel statistics provide a fair basis — when in fact they provide no basis at all — for estimating spending by those who cross the Canadian and Mexican borders by land, and those who live or travelling for more extended periods outside the USA.]

[Further update: Jacob Jou, who also objected to the Option 2 “algorithm” and who attended the court hearing on 31 March 2008, reported that, “The judge did not definitively rule on any issues (reserved most for future judgment), but he did say that he will not approve the Option 2 algorithm until all of the claims have been received AND de-duped by the settlement administrator, because he currently has inadequate information to determine whether the Option 2 algorithm is fair and adequate…. He said there will be a second hearing specifically on the Option 2 algorithm, but he didn’t say when it would be.”]

[1 March 2009: Follow-up article with links to the transcript of the hearing, additional documents, and later developments in the case.]

Link | Posted by Edward on Monday, 11 February 2008, 09:17 ( 9:17 AM)

I just mailed this in myself (Option 2, as I didn't want to dig up 10 years of credit card receipts). However, on the paper form that I got, I don't think there was a box for my credit card number. I could be wrong, in which case I'll likely get nothing, but I don't think there was anything like that.

And there's another problem, I now realize. I paid for everything, personal and work travel alike, with my personal credit card. Because of the billing/reimbursement cycle, I never got reimbursed for the fees that I had to pay. It sounds to me like I'm going to get abused for that yet again, as I did travel mostly for work and checked that box.

Since I literally chucked the envelope in the mail this morning, I've got no recourse now....

Posted by: Benn, 11 February 2008, 12:43 (12:43 PM)

In the next to last paragraph, you meant to write that the postmark deadline for mailing your objection is this Thursday, February 14, not March 14.

Posted by: Trev L., 11 February 2008, 16:48 ( 4:48 PM)

It's interesting to note that even if legitimate, this offer requires exactly the kind of personal disclosure which voids cardholders' agreements with banks and could very easily be turned into a phishing expidition. Frankly, this sounds to me like one of two possible things (other than what it purports to be):

1. a test of consumers' willingness to fork over their personal info, which we will be chagrinned to see at some time in the future on 60 Minutes, Dateline NBC or some other news show as part of a story about how easy it is to con Americans, or

2. a disguised method of getting US-based travelers to willingly provide (sell) information about their travel styles, activities and expenses -- something Jack Baur and CTU or the crew of ALIAS (or our own government, perhaps) might try in a desperate attempt to backtrace the money trails of suspected terrorists targeting the World Trade Ctr...hmm!!!

That said, if I could remember the numbers of the cards I used during the time, I'd probably do it since I'm not too pleased with the bank in question (which has since been swallowed up by another financial enterprise). I'd never in a million years provide any current information of this type since, even if this deal is nothing more than it purports to be, it only takes one bad apple (a financially desperate temp or intern, perhaps -- not to pick on those classes of workers in particular) to spoil the whole barrel. Imagine getting a check about a year from now, then a couple months later finding yourself cleared out, or worse: stripped of your legal identity. No, I don't think I'll be sticking my hand in this particular honeypot. There's just too good a chance there's a hive of angry wasps inside.

Posted by: Ben Bangs, 12 February 2008, 12:12 (12:12 PM)

While I cannot speak to the legitimacy of the web site referred to, I did receive written notice of this legal announcement regarding a class action suit payoff from my credit card vendor (Bank of America) a month ago. So the offer is legit. Tossed it in the trash. $25 ain't worth what it used to be. Now 25 pesos might have been different;-)

Posted by: Fascist Nation, 16 February 2008, 06:40 ( 6:40 AM)

As someone with well over 6 figures of foreign charged expenses during the claim period, I have real doubts that I will ever see anywhere near the 3% back that my Credit Card overcharged me during those years. Still, option 3 via USPS certified mail with return receipt (so that it becomes mail fraud, a federal offense, if anyone is playing games) seemed like a reasonable way to submit my claim.

My doubt about getting anything close to the 3% back is that the $25 minimums from options 1 and 2 are going to go to every Tom, Dick and Harry who spent FAR LESS than $2500 abroad during the period. It would have helped if these amounts had been subject to pro-ration too if there is not enough money in the pot to cover all the claims. I can find nothing that subjects these $25 minimums to such treatment.

Sadly, although I have doucmented records of all my expenses, I get the feeling I'll be lucky to see more than $100 coming back. Meanwhile the scheister attorneys get to walk away with $75 million plus another $5 million for expenses.

With corruption like this, one would think this is Ghana or something!!!

Posted by: Dave, 27 April 2008, 20:48 ( 8:48 PM)

Does it look like the lawsuit will ever be settled or just continue 'ad nauseum' until all of the money has been eaten up by the lawyers fees?

Posted by: Janna, 17 June 2008, 16:27 ( 4:27 PM)
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