If a California judge gets his way, Visa and MasterCard customers who have used their cards overseas and paid currency conversion charges may get a portion of those fees returned. Alameda County Judge Ronald Sabraw ruled this week that the credit card companies have not properly disclosed the fees they charge for the conversion service.

The judge's ruling is sealed while attorneys for both sides have an opportunity to offer written comments. A final ruling is expected on March 4. An unfavorable ruling could cost the credit card companies as much as $500 million.

Typically, credit cardholders who make purchases overseas are charged a fee by the bank for the service of converting the currency. The banks have been charging 1% on top of the actual conversion rate, a fee that has been described by attorney Patrick Coughlin, arguing on behalf of cardholders, as more than six times the actual cost of the conversion service. In addition, many credit card issuers assess an additional fee, sometimes as high as 2%.

At issue is not the fact that the fees have been assessed but that customers have not been made aware of the fee structure. Judge Sabraw said that he believed the credit card companies have a responsibility to disclose the fee to customers and that as a result, Visa and MasterCard may have to refund fees to cardholders dating back to 1996.

Noah Hanft, attorney for MasterCard, responded to the judge's preliminary decision by saying, "We believe this decision is at odds with the facts and the law; it's unprecedented, illogical, and extraordinary, and we see little chance it will withstand appeal."

Meanwhile, a ruling favorable to cardholders may open the door to many similar suits across the country. A federal suit against the credit card companies is pending now in Manhattan.

No matter what the final result turns out to be, change has already occurred in the way credit card companies approach the fees for conversion services. Literature that accompanies newly issued MasterCard and Visa cards contains a description of the surcharges.