Sending Money To Loved Ones Should Be Safer: Sending International Money Transfers or Remittances

The new rules that are set to start in one year have been in the pipeline for a long time. Consumers who have relatives overseas needed some type of protection when dealing with all these international money transfers. Soon these companies will be subjected to the scrutiny of the federal consumer regulations. At least, somebody will be paying attention the practices of these money transfers. Everyone hopes that the sad stories of lost or vanished funds will stop. The hope is that hidden fees will be stopped for good.

Here is a brief summary of what's being reported in the news media thus far about the topic:

Customers who send international money transfers will soon be entitled to clearer cost disclosures.
The Consumer Financial Protection Bureau on Friday issued new rules governing remittances, which are often used by immigrants to send money to family back home.

The rules also require companies to disclose any fees, the exchange rate and the amount that will ultimately be paid out to the recipient in local currency. Companies will also be required to investigate disputes and to give customers at least 30 minutes to cancel a transaction.

The rules take effect after one year.

The CFPB, which was created as part of the nation's overhaul of financial regulations, was required by law to issue the rules on remittances by Jan. 21. International money transfers previously had not been subject to federal consumer regulations.

Frustrations with the industry include complaints about hidden costs, missing funds or funds that never arrive at all, according to Ruth Susswein, a spokeswoman for Consumer Action, an advocacy group. She said customers can also face difficulty getting companies to resolve such problems.

The CFPB noted that consumers transfer tens of billions of dollars from the U.S. to foreign countries each year. Richard Cordray, who was appointed as the agency's first director this month, noted that the new rules will help consumers compare prices and hold companies accountable for any errors.

"People sending money to their loved ones in another country should not have to worry about hidden fees," Cordray said.

A Western Union Co. spokesman, Tom Fitzgerald, said the company plans to be compliant with the rules by the effective date. He said the company already provides customers with disclosures on fees, exchange rates and payouts.

"We agree that consumers will benefit if all remittance providers are held to the same requirements," he said.

MoneyGram International Inc. also said in a statement that it gives customers information about fees and rates and responds to complaints in a timely manner. The company said it is reviewing the rules to see if any adjustments will be needed.

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The Dodd-Frank Wall Street Reform Act as presented by ConsumerFinance.gov/regulations.....

"The rules require companies to give a disclosure to a consumer before the consumer pays for a remittance transfer. The disclosure must list:
The exchange rate,
Fees, and
The amount of money to be delivered.
Companies must also provide a receipt or proof of payment that repeats the information in the first disclosure. The receipt must also tell consumers the date when the money will arrive.
Companies must provide the disclosures in English. Sometimes companies must also provide the disclosures in other languages.
Other protections
The rules also require that:
Consumers get 30 minutes (and sometimes more) to cancel a transfer. Consumers can get their money back if they cancel.
Companies must investigate if a consumer reports a problem with a transfer. For certain errors, consumers can get a refund or transfer without charge the money that did not arrive as promised.
Companies that provide remittance transfers are responsible for mistakes made by certain people who work for them.
Coverage
The rules apply to remittance transfers if they are:
More than $15,
Made by a consumer in the United States, and
Sent to a person or company in a foreign country.
This includes many types of transfers, including wire transfers.
The rules apply to most companies that offer remittance transfers, including:
Banks,
Thrifts,
Credit unions, and
Money transmitters."