Bank of America Faces Class Action Over Allegedly Inflated International Transaction Fees

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A proposed class action lawsuit out of California challenges Bank of America, N.A.’s alleged practice of charging inflated international transaction fees (ITF) for foreign ATM transactions. 

According to the foreign transaction fees lawsuit, the bank has overstepped its Personal Schedule of Fees by applying a three-percent fee to not only the value of the foreign transaction itself but also the fees assessed by the foreign ATM operator.

The 18-page complaint explains that Bank of America’s fee schedule stipulates that the bank will apply both a three-percent ITF and $5 out-of-network fee to the amount of currency withdrawn in a foreign ATM transaction. Separately noted in BoA’s fee schedule is a statement relaying to customers that out-of-network ATM operators may also charge fees on such transactions, the case says. The lawsuit stresses that throughout the language of the fee schedule agreement, Bank of America consistently separates what it defines as a “transaction” and “transaction fees,” with the bank purporting that ATM transaction fees are explicitly kept separate from its three-percent ITF.

The lawsuit alleges that despite the fee schedule’s apparent clarity concerning the assessment of the three-percent fee on foreign transactions, Bank of America has overstepped its contractual terms by including the fees charged by ATM operators as part of the total foreign transaction amount—i.e. the amount to which the bank applies its three-percent ITF—when assessing international transaction fees. The plaintiff argues that nowhere in the defendant’s Personal Fee Schedule is the bank authorized to essentially double-apply its three-percent ITF.

“Nowhere in any of BoA’s account agreement authorizes BoA to assess a 3% ITF on top of the foreign ATM operator’s fee, and in fact, BoA’s Personal Schedule of Fees . . . expressly separates fees by the ATM operator from being considered part of the funds that the 3% applies to for determining the amount of the ITF,” the lawsuit alleges.

The plaintiff claims that while she was traveling in Mexico, she mistakenly withdrew 100 pesos from a foreign ATM in an attempt to withdraw $100 U.S. While the value of the transaction equaled only about $5.32 U.S., the Mexican ATM operator assessed the plaintiff a Value Added Tax (VAT) of 50 pesos and an eight-peso withdrawal fee, the suit says. Bank of America, according to the suit, charged the plaintiff a $5 out-of-network fee and a $0.25 international transaction fee, which the case says equates to three percent of the $5.32 transaction value plus the ATM operator’s fees. Had the bank applied the ITF to only the amount of the transaction, the fee would have equaled only $0.16, the plaintiff alleges.

The lawsuit argues that the bank, pursuant to its fee schedule, was entitled to apply the three-percent ITF to only the amount of the transaction itself, excluding the amount of any other fees. In short, the complaint says, the defendant was “essentially charging a fee on top of two other fees.”

The case adds that while the value of international transaction fees may be small to each consumer, the fees can add up significantly when all foreign transactions are considered. According to the complaint, VISA International’s one-percent currency exchange fees in 2004 added up to $424 million—nearly 30 percent of the company’s revenue that year. The suit points out that Bank of America is among several other financial institutions to have previously come under fire for unauthorized ITF practices in multidistrict litigation that resulted in a $336 million settlement in 2006.

This lawsuit looks to certify a class of all Bank of America checking accountholders who were assessed an ITF for the withdrawal of foreign currency at a foreign ATM “within the applicable statute of limitations,” with a separate proposed subclass of California residents.

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