CIBC today announced a $16.5 million settlement of a class-action lawsuit on behalf of Visa cardholders alleging they were shortchanged on foreign-exchange translations.

In a news release, CIBC said it “has not admitted any liability and is settling to avoid further litigation with its cardholders.”

The plaintiffs, represented by Paul Pape and Harvey Strosberg, had alleged that the conversion of transactions from a foreign currency resulted in an undisclosed or inadequately disclosed mark up. This mark up was added to the VISA International wholesale conversion rate to obtain the Canadian dollar equivalent for foreign transactions.

A court hearing is scheduled Oct. 7 to approve the settlement, and CIBC said it expects to provide credits in December ranging from 72¢ to $14.31 per cardholder.

“In addition, CIBC will also make a payment of at least $1 million to United Way in respect of past and inactive cardholders.”

Beginning tomorrow, notice of the settlement approval hearing will be published across Canada in 28 newspapers.