Visa 2007 Annual Report Download - page 34

Table of Contents
filed in federal court. The federal actions have been coordinated or consolidated in the U.S. District Court for the Southern District of New York. The
consolidated complaint alleges that the former currency conversion practices of Visa U.S.A. and Visa International violated federal antitrust laws.
On July 20, 2006 and September 14, 2006, Visa U.S.A. and Visa International entered into agreements settling or otherwise disposing of the federal and
state actions and related matters. Pursuant to the settlement agreements, Visa U.S.A. paid approximately $100 million as part of the defendants' settlement
fund for the federal actions and will pay approximately $20 million to fund settlement of the California cases. The federal court has granted preliminary
approval of the settlement agreements, but the settlement is subject to final approval by the court and resolution of all appeals. If final approval of the
settlement agreements is not granted, all of the agreements resolving the federal and state actions will terminate. If that occurs, and we are unsuccessful in
defending against some or all of these lawsuits, we may have to pay restitution and/or damages, and may be required to modify our currency conversion
practices. The potential amount of damages and/or restitution could be substantial. In addition, although Visa U.S.A. and Visa International have substantially
changed the practices that were at issue in these litigations, if the courts require further changes to our currency conversion and cross-border transaction
practices, it could materially and adversely affect our business. See Item 3—"Legal Proceedings—Other Legal and Regulatory Proceedings—Currency
Conversion Litigation."
If Visa U.S.A. or Visa International is found liable in certain other lawsuits that have been brought against them or if we are found liable in other
litigation to which we may become subject in the future, we may be forced to pay substantial damages and/or change our business practices or
pricing structure, any of which could have a material adverse effect on our financial condition, revenues and profitability.
In recent years, numerous civil actions and investigations have been filed or initiated against Visa U.S.A. and Visa International alleging or seeking
information as to violations of various competition, antitrust, consumer protection and other laws. These actions and investigations have been filed or initiated
by a variety of different parties, including the U.S. Department of Justice, state attorneys general, merchants, consumers, competing card-issuing companies
and other plaintiffs. Examples of such claims, which are described more fully under Item 3—"Legal Proceedings—Other Legal and Regulatory Proceedings,"
include the following:
• various state court actions based on a federal merchant class action lawsuit that Visa U.S.A. settled in 2003, alleging unlawful "tying" of credit
and debit card services, attempted monopolization and other state law competition claims;
• a patent infringement claim against Visa U.S.A. and Visa International involving the Verified by Visa product;
• a claim of patent infringement, misrepresentation, breach of contract and antitrust violations against Visa International relating to a license
agreement for smart card technology;
• two state unfair competition law claims, one against Visa U.S.A. and Visa International based in part on Visa U.S.A.'s past practice of prohibiting
member financial institutions from issuing certain competing payment cards, and another against Visa U.S.A. and Visa International alleging
failure to inform cardholders of a security breach in a timely manner;
• a promissory estoppel and misrepresentation claim against Visa U.S.A. and Visa International regarding deferment of a deadline for laboratory
certification of ATM devices meeting heightened data encryption standards;
• a trademark infringement claim against Visa International in Venezuela in connection with the Visa Vale product;
• a civil investigative demand to Visa U.S.A. from the Office of the Attorney General for the District of Columbia, in coordination with the
Attorneys General of New York and Ohio, seeking information regarding practices related to PIN debit cards;
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