By Jason Nisse Published: 04 September 2005
HSBC has been accused of being part of a cartel which has forced up fees and restricted consumers’ rights in the US credit card market.

Two lawsuits, filed in New York and Pennsylvania, have claimed that eight banks plus American Express came together to agree on a fee structure for Americans using their credit cards abroad – and terms and conditions that restrict customers’ rights. The eight banks – Bank of America, Capital One, JP Morgan, Citigroup, Morgan Stanley, HBSC, MBNA and Providian – are said to have agreed with American Express on minimum fees for currency conversion into US dollars for Americans abroad.

They are also said to have harmonised the terms and conditions on their credit cards to include a clause that forces any customer with a dispute to go to arbitration, so giving away their rights to sue the credit card issuer. The so called “arbitration” clauses are becoming increasingly common in the US as companies try to cut down on the amount of expensive litigation that they have to face. Although inserting the clauses into credit cards’ terms and conditions is not illegal – and was supported by a US judge last year – the litigation accuses the banks of meeting to agree upon common terms. The so- called “arbitration coalition” is said to have met 20 times between 1999 and 2003. This, it is claimed, constitutes a cartel and restraint of trade.

The move comes against the background of upheaval in the credit card market, with Mastercard announcing that it is going to float in the next few months. Its main rival, Visa International, is expected to follow.

The class action is being brought by seven individuals in five states, and is being co-ordinated by Pennsylvania law firm Berger & Montague.

It declined to comment, as did HSBC, citing legal advice.

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