Remittances Increase from USA, Progress on Disclosures, and Pushback from MTOs

New Orleans  I badly want to say that there is finally progress in the United States on remittances, which are financial transfers from immigrant families, migrant workers, and others to their families and communities back in their home countries.  The Wall Street Journal reported that the volume of money being remitted has in fact gone up based on the numbers available for 2010.  Our colleague, Manuel Orozco, the foremost US expert on remittances, even predicts an increase of 7% to 8% to Latin America and the Caribbean this year, which is also good news for developing countries.  The toothless World Bank says that the 215 million migrants it estimates around the world are moving $372 billion to developing countries in 2011 and they expect it to hit $399 in 2012 and $467 billion in 2013.  These are huge numbers, especially when one country after another continues to look the other way as migrants and immigrants are gouged by the costs of sending the money through the various money transfer organizations (MTOs).

The much heralded Consumer Financial Protection Bureau (CFPB) that was the brainchild of Elizabeth Warren, now running for the U.S. Senate in Massachusetts took up the matter this year and has promulgated regulations.  Unfortunately, they gummed the problem as well, possibly because of the limits on their authority.  Rather than addressing the predatory nature of the pricing, the final rule which takes effect in February 2013 simply puts forward the standard liberal palliative of better disclosure.  I’ve often shared the limited value of the disclosures in the tax preparation industry for predatory refund anticipation loans (RALs), where the companies (H&R Block, Liberty, Jackson-Hewitt) were all too willing to flaunt their 250% on computer screens and big posters, knowing that the marks (clients?) were so desperate for their money they had no choice but to suck down the charges.  This is the same song now with remittances, simply another verse.

To quote their own website summary, the CFPB rule says the following:

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 taxes,
  • The amount of money to be delivered abroad.

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.

I’ll read the whole 113 pages of the rule in coming days in hopes of finding something more helpful, but I’m afraid that’s the deal.

Outrageously, Miriam Jordan of the Journal reports this new rule “could raise costs for consumers…some experts said.”  She then quotes someone from Wells Fargo, which is an embarrassment of a bank on almost every count,

Daniel Ayala, head of global remittance services at Wells Fargo, praised the rule for creating a level playing field.  But he cautioned that, ‘there are details that could…ultimately result in limiting access, higher costs and confusion.’

Are you kidding me?!?  Finally having a wee bit of transparency (in English which doesn’t necessarily help!) and a receipt is going to raise costs.   Wells Fargo and their banking and MTO buddies simply have no shame.  I hope these hypocrites made a big fat contribution to Clinton’s Global Initiative, because they certainly don’t mind exploiting the living bejesus out of these immigrant and migrant families.

In Canada the bill to cap costs at 5% (remember that is the World Bank and G-8 goal!) is making progress.  More endorsements have come forward from the Canadian Union of Postal Workers (CUPW) and the University of Toronto Student Union.  There are also encouraging discussions with the Liberals, who may actually join with the NDP in a joint bill.  I’m holding my breath.  Somewhere developing countries and the workers trying to help their families have to get a real break on costs, not just a piece of paper with some numbers on it.

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Western Union and Money Mart Lobby Up to Fight Remittance Justice

New Orleans   Finally, the big-time money transfer organizations and the gazillions in predatory profits for moving money for migrant workers and immigrant families are at least hearing our footprints coming after them in the distance.

Several months ago Ontario NDP Member of Parliament Jagmeet Singh introduced a bill we had collaborated in writing under the provincial consumer protection statutes that would achieve the 5% ceiling on costs related to transfers supported by all of the G-8 countries and the World Bank.  Realistically, since the NDP is the minority party, it is hard to get a bill passed.  In Ontario lobby registration rules require lobbyists to register expressly on which bill or bills they are retained.  Bells and whistles went off for all of us in recent days when two lobbyists, jointly employed by Western Union and Money Mart, registered specifically on our 5% cap bill.

The obvious question was whether or not these slick operators had already started putting the squeeze on the McGinty government on our bill?  In the question period in the Provincial Parliament, MPP Singh asked the questions.  The answer was a non-answer and a classic runaround response, that I will share here with all of you in case for your personal and political enjoyment.

It’s on!

CONSUMER PROTECTION

Mr. Jagmeet Singh: My question is to the Minister of Consumer Services. In May, I introduced Bill 98 to stop large companies from charging unfair international money transfer fees. Now we have learned that the two biggest money transfer companies operating in Canada, MoneyGram and Western Union, have registered to lobby both the Ministry of Consumer Services and the Ministry of Finance on this bill.

Has the minister met with these advocates for these powerful companies, and what are they saying to her?

Hon. Margarett R. Best: I thank the member for the question. Certainly, consumer protection is an important issue for our government, and we are reviewing the bill that the member has put forward. As always, we’re reviewing this bill with a view to improving consumer protection in the province of Ontario. It is important to note as well that the federal government has a role to play in protecting consumers with regard to federally regulated financial services.

The ministry continues to analyze the bill, and we continue to look at options to improve consumer protection for Ontario consumers with regard to remittance fees. This is an issue which certainly impacts a great number of people in the province of Ontario, including myself and many of us in this Legislature—I would no doubt think that—and it’s an issue that also impacts many people who are new Canadians, so this is an issue which we find very important to us.

The Speaker (Hon. Dave Levac): Supplementary?

Mr. Jagmeet Singh: Again to the Minister of Consumer Services: When Ontarians send their hard-earned money to relatives overseas, multinational companies should not be allowed to siphon off as much as they please. Now, powerful US-based companies are fighting against a bill that would protect Ontarians.

Ontarians need to know: Will the minister take action to protect Ontarians from predatory money transfer companies, or will she capitulate to the high-paid lobbyists for these US companies?

Hon. Margarett R. Best: I would like the member opposite to know that this is an issue on which we continue to listen to all the interested parties, all the interested stakeholders, and certainly our consumers in the province of Ontario.

This issue, as I said, is a very complicated issue. There are many complicated factors that require a very thorough review of the bill. Because of the complex nature of this issue, we continue to review this bill carefully, the proposed legislation that has been put forward by the member opposite.

We continue to look at other ways to protect consumers in the province of Ontario, which is an issue which is very important to me and to our government.

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