Firms Expected to Sweeten Deal in Cash-Wiring Suit

In the wake of opposition from California lawmakers and Latino community organizers, Western Union, MoneyGram and Orlandi Valuta are expected Tuesday to announce an enhanced settlement to a federal class-action lawsuit alleging that they charged immigrants steep hidden costs to wire money to Mexico.

Western Union and Orlandi Valuta parent First Data Corp. and MoneyGram Payment Systems Inc. earlier this year had announced a settlement that was repudiated by a group of lawmakers as unfair to plaintiffs here. Since then, representatives of the companies and attorneys backing the deal have met repeatedly with key Latino legislators and community groups to win their support.

Neither the details of the enhancement nor the extent of California support for it were known Friday. But sources supporting the deal said it “makes the pot a lot sweeter” and is backed by “a who’s who of the Latino community.”

The original settlement was announced in May by the companies, who are leaders in the money transfer industry. It was negotiated by plaintiffs’ lawyers in Chicago and, through a preliminary injunction, effectively brought an end to similar class-action suits nationwide--including three in California.

The settlement called for the companies to donate $2.3 million to Latino community organizations in the U.S. and offer discount coupons to future customers who had paid undisclosed and unfavorable exchange rates while wiring money to Mexico since 1987.

The settlement awaits final approval by a federal judge next month. More than $4 billion a year is sent to Mexico from family and friends in the United States, the bulk of it from California.

A group of community leaders and lawmakers here--including U.S. Reps. Grace Napolitano (D-Norwalk), Matthew G. Martinez (D-Monterey Park) and Maxine Waters (D-Los Angeles), and California Senate Majority Leader Richard Polanco (D-Los Angeles)--had blasted the settlement as an end-run around the rights of immigrants.

Polanco is among the supporters of the new deal.

“He’s on board now,” chief aide Bill Mabie said. “It’s been a long process. . . . There have been some improvements to the settlement and fundamentally, [Polanco] believes there have been some steps in the right direction.”

Mabie said Polanco still plans to pursue legislation to reform practices of the industry, which often charges a floating and undisclosed exchange rate that is unfavorable to customers, arguably among the least sophisticated and most vulnerable consumers. However, the senator wants to move forward with cooperation from the industry, Mabie said.

Waters and Martinez, however, said they are not party to the enhanced deal and plan to forge ahead with opposition to the settlement. They have been lobbying to encourage Latino organizations and lawmakers who had supported the deal to withdraw that support.

“As of just a few days ago we were still trying to get people on the settlement to pull off,” Waters said.

Martinez said he was approached about the enhancement by Rep. Xavier Becerra (D-Los Angeles). He continues to oppose any settlement, particularly one that only compensates victims who use the companies’ services in the future. Instead, Martinez said, the case should be allowed to proceed in state court in California.