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New US Rule Could Help Consumers Who Send Money Abroad

By Maya Jackson Randall, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- 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

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  01-20-121610ET
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