People who wire money outside the country should have greater protection under a new federal rule that takes effect Monday.
Each year, tens of billions of dollars are wired outside the country. Companies that provide this "remittance transfer" service will be required to disclose the costs before the transaction is made, provide proof of payment and offer a way to resolve disputes.
"People sending money to their loved ones in another country should not have to worry about hidden fees," Director Richard Cordray of the Consumer Financial Protection Bureau said last year when the CFPB adopted the rule. "With these protections, international money transfers will be more reliable."
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The new rule, authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act, applies to international wire transfers of $15 or more handled by a bank, thrift, credit union and most other companies that provide this service. They now must do the following three things:
1. Provide prepayment disclosures
Wire transfer services must disclose the fees, taxes and exchange rate, so customers know the true cost of that transaction before they decide to approve it. This information is free, and the customer is under no obligation to continue with the transaction. They can use it to price shop.
If a transaction is completed, the customer has the right to a receipt that shows proof of payment, the fees and exchange rate, as well as when the money will be available at its destination.