As previously reported, Cynthia Haines used her credit cards to gamble over the Internet from her home in California and was sued by her credit issuer, Providian National Bank, because of unpaid bills. She then filed a countersuit against the bank as well as Visa and MasterCard, claiming the companies were at fault for letting her gamble with credit in the first place.
The suit also alleged that Internet gambling debts couldn't be collected in California because the wagers are illegal in the first place.
In July, MasterCard settled with Haines and adopted a policy that gambling sites would have to post a notice stating that Internet gambling could be illegal in a customer's jurisdiction.
Now Visa has come to a similar agreement with Haines, according to the court agreement.
Haines will not have to pay back her debts directly. The online gambling sites that took her bets will cover them with the Visa issuing banks. The Visa merchant sites will pay Providian National Bank nearly $5,000 and will pay First Union Direct Bank $5,400.
The Visa issuing banks have agreed to clear the interest on the bets and to state that Haines's account has been paid off.
Visa was not immediately available for comment.
"Visa has acknowledged that Visa is not everywhere you want to be when it comes to Internet gambling transactions--in some places, like California, such transactions are illegal," Haines attorney Ira Rothken said in a statement.
Congress is considering a bill that would outlaw most forms of Net gambling. The Internet Gambling Prohibition Act, authored by Sen. Jon Kyl (R-Arizona), would update the Federal Wire Act, which prohibits taking bets over phone lines.
"We believe that Visa has made significant progress since this case started in dealing with Internet gambling transactions, and ultimately they will be in the position technologically to prohibit all such transactions in the United States if and when the Kyl bill is passed by Congress," Rothken said.
The settlement requires Visa to send nationwide cardholders and its members the following notice:
"Internet Gambling Advisory: Internet gambling may be illegal in the jurisdiction in which you are located, including locations within the United States. Visa cards may only be used for legal transactions.
"Display of a payment card logo by an online merchant does not mean that Internet gambling transactions are lawful in all jurisdictions in which the cardholder may be located."