Is it really illegal? That's disturbing to hear, after reading so many good things about Banana Beach. The one thing I did find a little suspect, is that Banana Beach offered to book our airfare on Tropic Air and that we could pay for it at the hotel when we arrived. What wasn't stated (until today) was that this service would cost us 5%. I am now verifying if that 5% was included in the quoted airfare that was booked for us ($93US roundtrip).
I spoke with Visa directly and they do charge a 1% conversion rate for all overseas activity. I never saw this before and I've traveled extensively with this card. They explained that it may not have been broken out as a line item before, probably just rolled into the converted dollar amount of the bill. They also said that individual issuing banks may charge an additional fee for foreign transactions - luckily, my credit union does not.