Each year, several billion dollars is sent via money wire by immigrants to their homelands.
Often, the immigrants are charged hefty fees to send money to relatives. And when that money is converted to the foreign currency, some financial institutions deduct even more fees.
Mexican officials said Wednesday that Chicago will be the first U.S. city where they will start an informational program to help combat possible fraud.
“We have received an endless number of complaints,” said Consul General Heriberto M. Galindo, who invited Mexican officials to Chicago to investigate the issue.
Joining him at a news conference were lawyers from the attorney general’s office on consumer affairs, who were surveying immigrants in the consul general’s office and planned to meet with officials from the money wire companies.
An immigrant who sends $300 to Mexico can be charged anywhere from $8 to $35 in fees from the various money wire companies, the attorneys said. And the conversion from dollars to pesos is not always equitable. Some people received only 7.5 pesos per dollar when the exchange rate was 8.9 pesos per dollar, they said.
“We are not saying they are breaking the law. What we are saying is there is abuse,” said Jorge Romo, one of the visiting attorneys.
Romo said that relatives who suspect they were cheated can file complaints with the attorney general in Mexico. He added that relatives should communicate with each other to ensure the proper amount of money was received.
“They know what they paid here, but they often don’t know what their mothers or relatives received in pesos,” Romo said.
The Mexican government’s plan includes posting the conversion fees on a board at the consul general’s office.
About $4.8 billion was sent from the U.S. to Mexico through wire payments in 1997, according to Mexican banking officials.
In April, two lawsuits were filed in federal court in Chicago against Western Union Financial Services and MoneyGram Payment Systems, accusing them of racketeering and consumer fraud for allegedly charging hundreds of millions of dollars in hidden fees.
The two companies process about 80 percent of all wire transfers to Mexico. An attorney for the plaintiffs has estimated the firms earned about $200 million in undisclosed fees last year.
Officials from Western Union and MoneyGram have denied hiding fees from consumers.
Meanwhile, U.S. Rep. Luis Gutierrez (D-Ill.) has introduced federal legislation calling for full fee disclosure by financial institutions. He will introduce a separate bill next week to impose a fee cap of 5 percent above currency trading exchange rates.
Gutierrez’s staff found that immigrants sending money to Mexico paid as much as $50 on $500, compared with $31.85 on $500 sent to the Philippines, $28.15 to Ireland and $14.75 to Poland.
The House Banking Committee is planning a hearing on the international money wire issue at the end of July.
The Chicago City Council passed an ordinance in May requiring companies to post signs in English, Spanish and Polish warning customers that conversion fees are deducted. The ordinance was introduced by Ald. Edward Burke (14th) and co-sponsored by five Hispanic aldermen.
