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Judge dismisses lawsuit against Capital One over foreign currency transaction charges


dismisses lawsuit against Capital One

A lawsuit filed against Capital One for allegedly overcharging on foreign currency transactions was dismissed by a federal judge in Virginia. The plaintiffs, customers of Capital One, accused the bank of using "fictional" rates for currency conversion, resulting in higher charges.


They claimed the bank violated Visa and Mastercard's rules by not using wholesale market or government-mandated rates. This practice, they argued, led to inflated profits for Capital One, especially in transactions where a percentage fee is charged.


Judge Patricia Tolliver Giles, presiding over the case, found the plaintiffs' arguments insufficient. She pointed out that the cardholders failed to clearly demonstrate how their card agreements were breached by Capital One. The plaintiffs did not provide evidence that their agreements explicitly required the bank to follow the card processors' rules or that there was a justified expectation for specific exchange rates.



The judge's ruling emphasized that the plaintiffs did not convincingly argue Capital One's direct breach of contractual duties, either through its own actions or those of the card processors. The lack of a clear and unambiguous reference in the card agreements to the rates and fees imposed by Capital One was a key factor in the decision.


As of now, neither the plaintiffs' lawyers nor Capital One have publicly commented on the dismissal. This legal action is one aspect of Capital One's broader financial activities. In 2023, Capital One's credit card business generated $25.7 billion, comprising 70% of the bank's net revenue.


Additionally, Capital One announced its intention to acquire Discover Financial Services for $35.3 billion in stock, a move that could significantly alter the competitive landscape in the card network industry, challenging major players like Visa and Mastercard.



This case against Capital One, formally known as Wright et al v Capital One Bank (USA) NA et al, reflects ongoing legal scrutiny in the financial sector.


Interestingly, a similar lawsuit was filed against Bank of America in a North Carolina federal court, with a federal magistrate judge recently advising against dismissing that case. This contrast in judicial responses underscores the complexity and variability of legal challenges in the financial industry.


05.03.2024



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