Wednesday, October 03, 2007

TD Bank Customers Seek Damages Over FX Rates

Bloomberg, Joe Schneider, 3 October 2007

Toronto-Dominion Bank customers who say they were charged improper foreign-exchange fees on credit-card transactions are seeking a windfall by demanding wholesale rates available only to financial institutions, the bank's lawyer said.

Attorney Lyndon Barnes today urged the Ontario Court of Appeal to reject a request for certification of a class-action lawsuit over the fees. Customers were promised a competitive rate and they got it, even though some fees weren't fully disclosed, he said.

The plaintiffs, seeking C$150 million ($150 million) in damages, asked the appeal panel to overturn a lower-court ruling two years ago that denied them the right to sue as a group. The individual amounts are too small to warrant suing the bank on a case-by-case basis, although collectively they amount to a lot of money, the plaintiff's lawyer, Harvey Strosberg, said at a hearing.

``It applies to millions of contracts and millions of transactions,'' Strosberg said in his argument. ``A class-action is the only practicable procedure.''

Until 2001, Toronto-Dominion, Canada's third-biggest bank by assets, didn't disclose that credit-card customers were being charged an ``issuer fee'' of 0.4 percent to 1 percent and a 1 percent conversion fee on all foreign-exchange transactions, Strosberg said. The bank disclosed the fees on some Visa credit cards in 2001 and others in 2003.

``We say a deal is a deal,'' Strosberg said. ``The deal was for only certain, specified, charges, which did not include a conversion fee or an issuer fee.''

The plaintiffs want all undisclosed exchange fees collected by the bank for transactions between 1987 and 2001 on some Visa credit cards, and between 1987 and 2003 on the others, to be returned.

The amounts, although not broken down, were fully disclosed, Barnes said, pointing out each transaction was recorded on a statement received by the card holder. In one case, a $38.90 charge for a U.S. hotel room was clearly shown as a C$58.62 debit, he said

``A person receiving a statement knew exactly what he or she was paying,'' Barnes said.

They would have probably ended up paying more had they used an automated teller machine to withdraw money and paid cash for the hotel in the U.S., he said. A class-action certification isn't warranted because it's not clear if, or how much, each card holder should be compensated, Barnes said.

The court didn't indicate when it will rule in the case.

The case is Paul Cassano v Toronto-Dominion Bank, Ontario Court of Appeal (Toronto). Case No.: C46542.