3 Money-Transfer Firms Offer Plaintiffs Discounts
Mexican immigrants who sued money-transfer companies for allegedly charging them hidden transaction fees soon will be able to receive modest discounts from the companies.
Class-action suits against the companies -- First Data Corp. subsidiaries Western Union Financial Services Inc. and Orlandi Valuta, and MoneyGram Payment Systems Inc., a subsidiary of Viad Corp. -- alleged that they collected hidden charges for years from customers sending money from the United States to Mexico. The companies also were accused of failing to clearly disclose the charges in their ads.
The suits were settled two years ago. But as many as 5 million plaintiffs who used the companies to send funds to Mexico from about 1987 to 1999 have not received benefits because of legal wrangling. Claim forms now are being mailed out.
Those who sign the forms will get a choice of two $4.25 coupons or one $6 coupon for each transaction between 1993 and 1999. Customers, who can use one coupon per future transaction, can get another coupon for every 10 transactions before 1993.
The total value of the coupons is about $375 million.
“It’s a good settlement,” said Luis Pelayo, a plaintiff who has been sending money to his parents since he arrived in the United States and began working as a dishwasher 21 years ago. “Very poor people were being ripped off.”
Pelayo said he and others didn’t know about the foreign exchange charge -- the difference between the foreign exchange rate firms charge customers and the more favorable, wholesale rate they pay for pesos.
Western Union has maintained that forms customers filled out to send money had adequate disclosures. Spokesman David Banks said Western Union also added a more explicit explanation of the exchange rate fee after the suit was filed.
“This afforded us the opportunity to make some additional disclosures in the form, to be a good corporate citizen here and to make things even more clear to our customers,” he said.
MoneyGram never intended to misleadingly advertise, said spokeswoman Angela Phoenix. It already has changed its ads to more clearly explain the exchange rate fee, as required by the settlement, she said.
The settlement also awards about $10 million in plaintiffs’ attorneys fees, to be split among a team of lawyers from eight firms.
