If you’re sending money internationally, your transactions are covered by new federal rules that impose disclosure and complaint-handling requirements on so-called remittance companies such as Western Union and MoneyGram.
The rules, which went into effect Oct. 28, were adopted by the Financial Consumer Protection Bureau under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
While giving consumers new protections, the rules stop short of mandating a system that would make it easier for people sending money internationally to determine which transfer company is offering the best value.
What the new rules require
The new rules give consumers up to six months to dispute errors with the remittance transfer companies, which then have 90 days to investigate and then report back with the results. For certain errors, consumers may be entitled to a refund or to have the money sent again.
The rules also require a series of pre- and post-purchase purchase disclosures. Pre-purchase disclosures include the transaction’s exchange rate – the amount of foreign currency provided for every U.S. dollar, a list of fees and taxes to be charged by the money-transfer company, any additional fees charged by its agents and certain other institutions involved in the transfer, and the amount of money expected to be delivered, not including foreign taxes and certain other fees.
Once the transaction has been completed, customers must receive another written copy of the exchange rate, fees, and taxes, along with written notice of when the money will be available at its destination. Customers also must receive notice of their right to cancel the transfer at no charge, generally within 30 minutes, but, in the case of transfers scheduled in advance, up to three days before the transfer occurs. Customers must also receive instructions on what to do if there’s an error and how to submit a complaint. (For more information about the new rules, download a CFPB fact sheet (PDF).
When we looked at the industry in 2011, we found that money transfer companies already were providing many of the now-required disclosures and that customers generally seemed satisfied. People who work in the U.S. and have famiiles in other countries often depend on the companies to send money home, including to Central and South America and India.