According to a proposed class action lawsuit, Western Union Company fails to inform customers who visit its foreign agencies that it will “drastically manipulate” the foreign exchange rate in its favor, thereby allowing the money transfer mainstay to reap undisclosed fees.
Moreover, the lawsuit alleges Western Union fails to inform customers that not all agencies will be able to “immediately” pay the transferee, and provides the terms of its general conditions only in the language of the country in which the agency is located.
The plaintiff, an attorney who frequently sends money to New Jersey and Canada from France, claims he was unaware that Western Union adds an “onerous and unconscionable” margin to foreign exchange rates in order to generate additional profits from its money transfer services. Although the agency states on the back of the form provided to customers that Western Union will “increase the interbank exchange rate” by a certain margin, the amount of the margin is not disclosed and not “otherwise readily discernable” by the customer, the case alleges.
Further, the general conditions listed on the back of the form are in “ridiculously small fine print” and are written only in the language of the country in which the foreign agency is located, per the suit.
Western Union effectively fails to apprise customers at its foreign agencies of both the true cost of using its services and that the foreign exchange rate applied to the transaction is less favorable to the customer than the market rate, the lawsuit says. From the complaint:
“Although WU is careful to disclose the transfer fee charged on the front of the WU form, as well as the foreign exchange rate actually utilized (which includes the undisclosed margin), WU is very careful not to disclose on the front of the WU form the amount of margin added to the foreign exchange rate, or any other information necessary to enable the consumer to understand how WU has utilized a foreign exchange rate that is far less favorable to the consumer than either the market or interbank exchange rates applicable at the time of the transaction. WU deceives the consumer.”
The lawsuit goes on to allege that Western Union falsely and misleadingly purports that the exchange rate utilized at its foreign agencies is the prevailing rate at the time of the transaction. In truth, the suit says, customers can “systematically” obtain better exchange rates from Western Union through its websites. The plaintiff alleges that a transaction he completed through a foreign WU agency yielded significantly less money than the same transaction would have yielded had it been performed online.
“For example,” the complaint states, “for the amount transferred by [the plaintiff] on March 9, 2020 (1,582.12€), at the exchange rate represented by WU of 1 EUR = $1.56 CAD on the WU online site (https://onlinefx.westernunion.com/), which was the approximate market rate that day, there should have been a yield to the recipient of $2,468.10 CAD. Yet the yield was but $2,145 CAD—a difference of $323.10 CAD.”
The case alleges that although Western Union represents to customers that it will charge a “reasonable” fee for its services, the difference detailed in the example above represents 13 percent of the total transaction amount, which the plaintiff argues is an “onerous, unconscionable” fee. More from the complaint:
“Through its online website WU intentionally creates the impression that the transaction is not expensive by advertising a relatively modest transaction fee, when in reality the transaction is highly expensive due to the hidden margin added to the foreign exchange rate, which WU does not disclose.”
The suit goes on to allege Western Union further misleads customers by failing to disclose that they can obtain a more favorable exchange rate and lower transfer fee by transferring higher amounts of money. Western Union customers are unaware that more frequent transactions of lower amounts are more favorable to the defendant than one larger money order, the suit says.
“Certainly no customer walking into a foreign WU agency to transfer money would know this, because WU fails to disclose it,” the complaint scathes, adding that the agency similarly fails to inform customers that it is cheaper to pay for money orders with cash than by credit or debit card.
Finally, the lawsuit alleges that Western Union misleadingly advertises that funds transferred through foreign agencies can be available to transferees “in minutes” when “such is not always the case.” According to the plaintiff, the defendant fails to ensure that its agencies have sufficient cash on hand and sometimes forces transferees to wait days before their money becomes available, all while retaining the amount for interest-free use.
The case looks to represent anyone who effectuated a money order at a Western Union agency outside the U.S. and paid WU with funds debited from a U.S. bank account.
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