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subsidiary bank corporations (issuing banks) issued Visa cards2
to customers who qualified for the cards.
To apply for a card, a customer would complete a credit card
application at the branch office of an issuing bank. The issuing
bank's credit department would review the application and decide
whether to issue a card to the applicant and, if so, the amount
of the credit limit for that account. Once the card was issued,
the cardholder could use the card to charge the cost of goods and
services provided by merchants who accept payment by Visa card
(merchants). Cardholders agreed to surrender their cards upon
demand, and petitioner could cancel their cards at any time for
almost any reason.
Cardholders received new cards annually. If a card was lost
or stolen, petitioner would replace it at no additional charge.
If the card was stolen, petitioner would issue a new card, and
the cardholder's liability for any charges resulting from the
theft of the old card, if any, was limited to $50. If the
cardholder had a problem with the quality of a product or service
purchased with the card, under certain conditions, the cardholder
may have had the right not to pay the remaining amount due on
that product or service. The cardholder could deduct disputed
2 During 1980 and 1981, a small number of Mastercard credit
cards were outstanding. For purposes of convenience we refer to
Visa cards or just cards; however, all references to Visa or
cards apply to both Visa and Mastercard credit cards. The
proposed adjustment relates to annual fees charged to both
Mastercard and Visa cardholders.
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Last modified: May 25, 2011