New US Rule Could Help Consumers Who Send Money Abroad
January 20 2012 - 4:25PM
Dow Jones News
The U.S. Consumer Financial Protection Bureau Friday adopted a
rule that will require protections for consumers that transfer
money internationally, its first substantive rule since starting up
as a new financial markets watchdog in July.
The bureau's rule will impact companies such as Western Union
Co. (WU) and MoneyGram International Inc. (MGI) that offer wire
transfers to consumers seeking to get cash to relatives in the
Caribbean, Latin America and other foreign countries.
The companies will be required to disclose the fees, the
exchange rate, and the total amount that will be sent to the
recipient. Disclosures must be provided when the consumer requests
a wire transfer and also when the consumer makes a payment.
"People sending money to their loved ones in another country
should not have to worry about hidden fees," said Richard Cordray,
the bureau's new director. "With these new protections,
international money transfers will be more reliable. Consumers will
know the costs ahead of time and be able to compare prices.
Transfer providers will also be held accountable for errors that
occur in the process."
Consumers transfer billions of dollars from the U.S. to other
countries each year, and the fees haven't always been fully
disclosed. Also, for some consumers the total cost has been hard to
determine. Public-interest groups had voiced concern that the
remittance market largely escaped federal scrutiny and that
immigrants and other consumers have been forced to pay excessive
fees to send money abroad.
The 2010 Dodd-Frank financial law, which created the consumer
bureau, expanded consumer protection laws to provide protections
for consumers who use wire transfer services. The law mandated that
certain rules on remittance transfers be issued by Jan. 21,
2012.
The World Bank estimates that the total volume of remittance
transfers to developing countries reached $325 billion in 2010 and
that the U.S. is the largest remittance-sending country in the
world. The majority of remittances from the U.S. are sent to the
Caribbean and Latin America, according to the Federal Reserve.
-By Maya Jackson Randall, Dow Jones Newswires; 202-862-6687;
maya.jackson-randall@dowjones.com