[Congressional Record Volume 148, Number 108 (Thursday, August 1, 2002)]
[Senate]
[Pages S7951-S7952]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CORZINE (for himself and Mr. Akaka):
  S. 2885. A bill to amend the Electronic Fund Transfer Act to require 
additional disclosures relating to exchange rates in transfers 
involving international transactions; to the Committee on Banking, 
Housing, and Urban Affairs.
  Mr. CORZINE. Mr. President, along with my distinguished colleague 
from Hawaii, Senator Akaka, I am introducing The Wire Transfer Fairness 
and Disclosure Act, legislation that will protect consumers who send 
cash remittances through international money wire transfer companies by 
providing greater disclosure of the fees, including hidden costs, 
charged for those services.
  Every year, thirty million Americans send their friends and relatives 
$40 billion in cash remittances through wire transfers. The majority of 
these transfers are remittances sent to their native countries by 
immigrants to the United States. For these individuals, many of whom 
are in low-to-minimum wage jobs, sending this money only increases 
their own personal financial burdens--but they do so to aid their 
families and their loved ones.
  Unfortunately, these immigrants increasingly find themselves being 
preyed upon by the practices of some money wire transfer providers who 
not only charge consumers an upfront charge for the transfer service, 
but also hit them on the back end with hidden costs. Many of these 
charges are extracted when the dollars sent by the consumer are 
converted to the foreign currency value that is supposed to be paid out 
to the friend of the family member.
  This exploitation is especially pervasive in Latin American and 
Caribbean countries. In fact, as many as 10 million Hispanic immigrants 
in the U.S. send remittances to their family and friends back home. 
Cumulatively, these individuals send $23 billion annually to some of 
our hemisphere's poorest economies. This money is used to pay for such 
basic needs such as food, medicine, and schooling.
  In most Latin American and Caribbean countries, remittances far 
exceed U.S. development assistance. In the case of Nicaragua, Haiti, 
Jamaica, Ecuador and El Salvador, cash remittances account for more 
than 10 percent of national GDP.
  These large cash flows have proven to be a powerful incentive for 
greed in the case of some wire transfer companies. Customers wiring 
money to Latin America and elsewhere in the world lose billions of 
dollars annually to undisclosed ``currency conversion fees.'' In fact, 
many large companies aggressively target immigrant communities, often 
advertising ``low fee'' or ``no fee'' rates for international 
transfers. But these misleading ads do not always clearly disclose the 
fees charged when the currency is exchanged.
  While large wire service companies typically obtain foreign 
currencies at bulk rates, they charge a significant currency conversion 
fee to their U.S. customers. For example, customers wiring money to 
Mexico are charged an exchange rate that routinely varies from the 
benchmark by as much as 15 percent. These hidden fees create staggering 
profits, allowing companies to reap billions of dollars on top of the 
stated fees they charge for the wire transfer services.
  While this practice may not be illegal, it is wrong, and it must be 
stopped. The Wire Transfer Fairness and Disclosure Act requires 
financial institutions or money-transmitting businesses that initiate 
international money transfers to disclose all fees charged in an 
international wire transfer.
  The legislation also requires these companies to provide consumers 
with important disclosures regarding the exchange rate used in 
connection with the transaction; the exchange rate prevailing at a 
major financial center in the foreign country whose currency is 
involved in the transaction; or the official exchange rate, if any, of 
the government or central bank of that foreign country.
  The bill would additionally require disclosure to the consumer who 
initiates the transaction of any fees or commissions charged by 
transfer service providers in connection with any transaction and the 
exact amount of foreign currency to be received by the recipient in the 
foreign country, which shall be disclosed to the consumer before the 
transaction is consummated and printed on the receipt given to 
customer.
  This legislation does more than merely provide better information to 
consumers--it should also help them financially. Consumers will see 
increased competition among wire transfer companies because they are 
better-informed and more knowledgeable. That competition will result in 
lower fees for the wire transfer services that will free up a greater 
portion of these cash remittances to go to the friends and families 
that they were originally intended for.
  In short, this is sound public policy that empowers those who do 
their part to help America's economy move forward.
  I hope that my colleagues will support this legislation.
  Mr. AKAKA. Mr. President, I cosponsor the Wire Transfer Fairness and 
Disclosure Act of 2002, introduced by my colleague, Senator Corzine. I 
thank Senator Corzine and Representative Luis Gutierrez for their 
leadership on this issue. I also want to express my appreciation to the 
Chairman of the Banking Committee, Senator Sarbanes, for conducting a 
hearing on the issue of remittances.
  Immigrants nationwide often send a portion of their hard-earned wages 
to

[[Page S7952]]

relatives and their communities abroad. Remittances can be used to 
improve the standard of living of recipients by increasing access to 
health care and education.
  Unfortunately, people who send remittances are often unaware of the 
fees and exchange rates used in the transaction that reduce the amount 
of money received by their family members. In many cases, fees for 
sending remittances can be ten to twenty percent of the value of the 
transaction. In addition to the fees, the exchange rate used in the 
transaction can be significantly lower than the market rate. The 
exchange rate used in the transaction is typically not disclosed to 
customers.
  Consumers cannot afford to be uneducated regarding financial service 
options and fees placed on their transactions. This legislation is 
needed to provide the necessary information to consumers so that they 
may make informed decisions about sending money. The Wire Transfer 
Fairness and Disclosure Act would ensure that each customer is fully 
informed of all of the fees and the exchange rates used in the 
transaction.
  If consumers are provided additional information about the 
transaction costs involved with sending money, they may be more likely 
to utilize banks and credit unions which often can provide lower cost 
remittances. If unbanked immigrants use the remittance services offered 
by banks and credit unions, they may be more likely to open up an 
account. Many immigrants are unbanked and lack a relationship with a 
mainstream financial services provider. The unbanked are more likely to 
use check-cashing services which charge an average fee of over nine 
percent. They are also more likely to utilize the services provided by 
pay-day and predatory lenders. The unbanked miss the opportunities for 
saving and borrowing at mainstream financial institutions.
  This legislation is particularly important to my home State of 
Hawaii. Hawaii is home to significant numbers of recent immigrants from 
many nations, including the Philippines. The Philippines is one of the 
largest destinations for remittances from the United States. The gross 
value of remittances to the Philippines is $3.7 billion and a large 
portion of that amount comes from people in Hawaii.
  Mr. President, I encourage all of my colleagues to support this much 
needed legislation and I ask unanimous consent that a copy of the bill 
be printed in the Record at this point.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2885

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Wire Transfer Fairness and 
     Disclosure Act of 2002''.

     SEC. 2. DISCLOSURE OF EXCHANGE RATES IN CONNECTION WITH 
                   INTERNATIONAL MONEY TRANSFERS.

       (a) In General.--The Electronic Fund Transfer Act (15 
     U.S.C. 1693 et seq.) is amended--
       (1) by redesignating sections 918 through 921 as sections 
     919 through 922, respectively; and
       (2) by inserting after section 917 the following new 
     section:

     ``SEC. 918. DISCLOSURE OF EXCHANGE RATES IN CONNECTION WITH 
                   INTERNATIONAL MONEY TRANSFERS.

       ``(a) Definitions.--In this section, the following 
     definitions shall apply:
       ``(1) International money transfer.--The term 
     `international money transfer' means any money transmitting 
     service involving an international transaction which is 
     provided by a financial institution or a money transmitting 
     business.
       ``(2) Money transmitting service.--The term `money 
     transmitting service' has the same meaning as in section 
     5330(d)(2) of title 31, United States Code.
       ``(3) Money transmitting business.--The term `money 
     transmitting business' means any business which--
       ``(A) provides check cashing, currency exchange, or money 
     transmitting or remittance services, or issues or redeems 
     money orders, travelers' checks, or other similar 
     instruments; and
       ``(B) is not a depository institution (as defined in 
     section 5313(g) of title 31, United States Code).
       ``(b) Exchange Rate and Fees Disclosures Required.--
       ``(1) In general.--Any financial institution or money 
     transmitting business which initiates an international money 
     transfer on behalf of a consumer (whether or not the consumer 
     maintains an account at such institution or business) shall 
     disclosure, in the manner required under this section--
       ``(A) the exchange rate used by the financial institution 
     or money transmitting business in connection with such 
     transactions;
       ``(B) the exchange rate prevailing at a major financial 
     center of the foreign country whose currency is involved in 
     the transaction, as of the close of business on the business 
     day immediately preceding the date of the transaction (or the 
     official exchange rate, if any, of the government or central 
     bank of such foreign country);
       ``(C) all commissions and fees charged by the financial 
     institution or money transmitting business in connection with 
     such transaction; and
       ``(D) the exact amount of foreign currency to be received 
     by the recipient in the foreign country, which shall be 
     disclosed to the consumer before the transaction is 
     consummated and printed on the receipt referred to in 
     paragraph (3).
       ``(2) Prominent disclosure inside and outside the place of 
     business where an international money transfer is 
     initiated.--The information required to be disclosed under 
     subparagraphs (A), (B), and (C) of paragraph (1) shall be 
     prominently displayed on the premises of the financial 
     institution or money transmitting business both at the 
     interior location to which the public is admitted for 
     purposes of initiating an international money transfer, and 
     on the exterior of any such premises.
       ``(3) Prominent disclosure in all receipts and forms used 
     in the place of business where an international money 
     transfer is initiated.--All information required to be 
     disclosed under paragraph (1) shall be prominently displayed 
     on all forms and receipts used by the financial institution 
     or money transmitting business when initiating an 
     international money transfer in such premises.
       ``(c) Advertisements in Print, Broadcast, and Electronic 
     Media and Outdoor Advertising.--The information required to 
     be disclosed under subparagraphs (A) and (C) of subsection 
     (b)(1) shall be included--
       ``(1) in any advertisement, announcement, or solicitation 
     which is mailed by the financial institution or money 
     transmitting business and pertains to international money 
     transfers; or
       ``(2) in any print, broadcast, or electronic medium or 
     outdoor advertising display not on the premises of the 
     financial institution or money transmitting business and 
     pertaining to international money transfers.
       ``(d) Disclosures in Languages Other Than English.--The 
     disclosures required under this section shall be in English 
     and in the same language as that principally used by the 
     financial institution or money transmitting business, or any 
     of its agents, to advertise, solicit, or negotiate, either 
     orally or in writing, at that office, if other than 
     English''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 3 months after the date of enactment of 
     this Act.
                                 ______