Visa 2007 Annual Report Download - page 157

Table of Contents
VISA U.S.A. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On June 7, 2007, the court issued an Opinion and Order holding that the Settlement Service Fee violated the final judgment in the Department of Justice
litigation at October 15, 2004. On June 15, 2007, the court issued an Amended Opinion and Order, clarifying the remedy in the ruling. First, the court ordered
Visa U.S.A. to repeal the Settlement Service Fee bylaw. Second, the court gave any Visa U.S.A. debit issuer subject to the Settlement Service Fee prior to its
repeal who entered into an agreement that includes offline debit issuance with Visa U.S.A. on or after June 20, 2003 the right to terminate its agreement,
provided that the issuer has entered into an agreement to issue MasterCard-branded debit cards and the issuer repays to Visa U.S.A. any unearned benefits or
financial incentives under its Visa U.S.A. agreement. On June 13, 2007, the parties entered into an agreement to toll the statute of limitations on certain
potential claims MasterCard may have against Visa U.S.A. in connection with the Settlement Service Fee.
Pursuant to the court's order, the settlement service fee bylaw was rescinded as of the effective date of the order. On June 29, 2007, Visa U.S.A. filed a
notice of appeal to the Second Circuit Court of Appeals. Visa U.S.A. also sought a stay pending appeal as to the remainder of the court's remedy, which the
District Court denied on August 7, 2007.
On August 17, 2007, Discover Financial Services and DFS Services LLC moved the District Court to intervene in the SSF matter. Discover also sought
to have the District Court modify its June 15, 2007 order to (1) extend the contract termination remedy to issuers entering into agreements with Discover; and
(2) void certain provisions of Visa's debit agreements. On September 10, 2007, American Express filed a motion seeking to intervene if the court were to
grant Discover's motion to intervene. The District Court denied Discover's motion and declared American Express's motion moot on October 12, 2007.
On September 11, 2007, Discover filed a motion to intervene in the SSF case in the Second Circuit and asked the Second Circuit to remand the case to
the District Court. Visa U.S.A. opposed Discover's motion. Briefing is complete but no decision has been issued by the Second Circuit.
Currency Conversion Litigation
State Litigation
In 2000, a "representative" action was filed in California state court against Visa U.S.A. and Visa International in connection with Visa's practice of
charging its members a 1% "currency conversion fee" when a U.S. cardholder purchases goods or services in a foreign currency and the disclosure of that fee
(Schwartz). Plaintiffs claimed Visa's currency conversion practices violated California Business & Professions Code Section 17200 and sought injunctive
relief and restitution.
Four additional California state currency conversion class actions were filed against Visa U.S.A. and Visa International. Shrieve and Castro alleged that
Visa had a duty to inform cardholders using debit cards overseas of the existence of the 1% currency conversion fee that Visa charges its members. Mattingly
alleged Visa had a duty to inform cardholders using credit cards overseas of the existence of the 1% currency conversion fee. Baker challenged Visa
International's calculation of currency conversion rates and the disclosure of those rates. All plaintiffs sought restitution and injunctive relief.
Federal Multidistrict Litigation (MDL)
A federal MDL currency conversion lawsuit alleged, inter alia, price-fixing violations against Visa U.S.A., Visa International and a number of banks
arising out of the 1% currency conversion fee Visa charges to members and the optional issuer fees that issuers may charge cardholders. In March 2005, the
court held that plaintiffs with
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