Signet Banking Corporation - Page 6

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          from amounts paid to merchants (merchant discount), interchange             
          fees, annual membership fees, finance charges paid by                       
          cardholders, cash advance fees (until May 1983), over limit fees,           
          and other charges (such as late payment and credit life fees).              
               Other major banks were charging annual membership fees for             
          credit cards when petitioner decided to charge an annual fee.               
          Petitioner was one of the first Virginia banks to do so.                    
               b.   Annual Membership Fees Charged by Petitioner                      
               To become or remain a MasterCard cardholder after April 1,             
          1981, petitioner required payment of an annual membership fee of            
          $15 for a regular MasterCard or $36 for a Special Edition Gold              
          MasterCard or a commercial account.  On April 1, 1981, petitioner           
          began to charge its regular MasterCard cardholders an annual                
          membership fee of $15 regardless of the cardholder’s credit line,           
          usage, balance (if any) carried from month-to-month, or credit              
          standing.  Petitioner first billed cardholders for the annual               
          membership fee in July 1981.  In 1986, petitioner raised the $15            
          annual membership fee to $18 per year.  From 1983 to 1985,                  
          petitioner also offered affinity group (i.e., alumni of a                   
          particular university) MasterCards for $18 and $20.                         
               c.   Implementation of the Annual Membership Fee                       
               Petitioner sent its cardholders a disclosure statement as              
          required by Regulation Z, 12 C.F.R. sec. 226.9(b) (1981), stating           
          the change in contract terms and a letter describing the services           





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