Appleseed and Congressmen Release Remittance Report
Tuesday, December 20
- Organization: Appleseed
Appleseed and Congressmen Release Remittance Report
December 16, 2005 - This week, Appleseed released a ground-breaking report on "remittances" – the billions of dollars that immigrants in the United States send home to family members living in their native countries. The report provides remitters and policymakers with vital information necessary on how the remittance market actually functions and sets forth recommendations to create greater protection for this vulnerable consumer group while allowing the industry to maintain market control.
The money flowing from the United States to Mexico currently represents the largest remittance market in the world, likely to reach over $20 billion in 2005 alone. According to the Appleseed study, the unpredictable and undisclosed rates and fees financial institutions charge for this service mean $948 million of these funds will never make it to their intended recipient. A serious lack of transparency, lack of consistent access to correct pricing information and a lack of standardized pricing disclosure practices make it extremely difficult for consumers to make informed market decisions about which remitting service to choose and keep this market inefficient and costly for immigrants, who often occupy the lowest income rungs of the American economy.
To provide a more complete picture of the impact of the exchange rate spread on pricing four Appleseed Centers – Illinois, Georgia, Nebraska, and Texas – collected exchange rate data for wiring money to Mexico from 21 different remittance services at the same time, twice a day, over a two week period in June of 2005. These parameters made it possible to compare service pricing across geographic areas and between remittance service providers.
"Much attention has been paid recently to the lowering of flat fees associated with sending remittances," noted Linda Singer, Executive Director of Appleseed. "Through Appleseed’s study, we aimed to fully examine the vital issue of what has been happening with the associated exchange rate. Our findings confirm our suspicion that the exchange rate has not come down with the lowered remittance sending flat fee, and now we are taking the steps to share our results with the people who are in a position to act on the needed changes."
"Remittances are a very important social and economic tool, and I am grateful for Appleseed for giving us some proposals for how we can improve them," said Congressman Barney Frank.
"The policy recommendations put forth today make sense – they give consumers a choice and the ability to make sound financial choices and decisions that in the end will improve their overall quality of life," said Congressman Rubén Hinojosa. "For too long, immigrants have been ‘unbanked’ and have been victims of predatory lenders and high-cost lenders and therefore, effectively left out of mainstream financial institutions, unable to build credit or their assets."
"Appleseed’s good work on the exchange rate spread just strengthens the case for a clear disclosure requirement," noted Congressman Luis Gutierrez. "I have repeatedly introduced legislation that would provide such information – enabling consumers to be able to make an apples-to- apples comparison and shop around for the best deal when sending their hard-earned money to their loved ones."
Appleseed’s report offered three key recommendations on how to best handle the problem, including encouraging the industry to improve customer service and disclose exchange rate and cost information, implementing consumer-oriented federal oversight of international money transfers, and creating a system of third-party regulation– similar to the successful Fair Trade program in the coffee market--to set the standard for fair remittance pricing practices.
www.appleseeds.net
December 16, 2005 - This week, Appleseed released a ground-breaking report on "remittances" – the billions of dollars that immigrants in the United States send home to family members living in their native countries. The report provides remitters and policymakers with vital information necessary on how the remittance market actually functions and sets forth recommendations to create greater protection for this vulnerable consumer group while allowing the industry to maintain market control.
The money flowing from the United States to Mexico currently represents the largest remittance market in the world, likely to reach over $20 billion in 2005 alone. According to the Appleseed study, the unpredictable and undisclosed rates and fees financial institutions charge for this service mean $948 million of these funds will never make it to their intended recipient. A serious lack of transparency, lack of consistent access to correct pricing information and a lack of standardized pricing disclosure practices make it extremely difficult for consumers to make informed market decisions about which remitting service to choose and keep this market inefficient and costly for immigrants, who often occupy the lowest income rungs of the American economy.
To provide a more complete picture of the impact of the exchange rate spread on pricing four Appleseed Centers – Illinois, Georgia, Nebraska, and Texas – collected exchange rate data for wiring money to Mexico from 21 different remittance services at the same time, twice a day, over a two week period in June of 2005. These parameters made it possible to compare service pricing across geographic areas and between remittance service providers.
"Much attention has been paid recently to the lowering of flat fees associated with sending remittances," noted Linda Singer, Executive Director of Appleseed. "Through Appleseed’s study, we aimed to fully examine the vital issue of what has been happening with the associated exchange rate. Our findings confirm our suspicion that the exchange rate has not come down with the lowered remittance sending flat fee, and now we are taking the steps to share our results with the people who are in a position to act on the needed changes."
"Remittances are a very important social and economic tool, and I am grateful for Appleseed for giving us some proposals for how we can improve them," said Congressman Barney Frank.
"The policy recommendations put forth today make sense – they give consumers a choice and the ability to make sound financial choices and decisions that in the end will improve their overall quality of life," said Congressman Rubén Hinojosa. "For too long, immigrants have been ‘unbanked’ and have been victims of predatory lenders and high-cost lenders and therefore, effectively left out of mainstream financial institutions, unable to build credit or their assets."
"Appleseed’s good work on the exchange rate spread just strengthens the case for a clear disclosure requirement," noted Congressman Luis Gutierrez. "I have repeatedly introduced legislation that would provide such information – enabling consumers to be able to make an apples-to- apples comparison and shop around for the best deal when sending their hard-earned money to their loved ones."
Appleseed’s report offered three key recommendations on how to best handle the problem, including encouraging the industry to improve customer service and disclose exchange rate and cost information, implementing consumer-oriented federal oversight of international money transfers, and creating a system of third-party regulation– similar to the successful Fair Trade program in the coffee market--to set the standard for fair remittance pricing practices.
www.appleseeds.net
Topics:
.jpg)
.bmp)
.gif)
