December 11, 1998

Mexican Warned To be Wary of Costs to Wiring Money Back Home

By Cynthia L. Webb

LOS ANGELES - Rodolfo Gomez came to the United States three years ago to support his wife and two children in Mexico City.

Almost weekly, the 34-year-old restaurant employee journeys to a money-transfer house in downtown Los Angeles to wire between $150 and $300 - almost all of his earnings - back to the family he has not seen for more than a year.

But by the time his wife gets the money, it is often far less than he sent, because of service fees and wavering exchange rates.

``The problem is it takes your money away,'' Gomez said. ``It's not something that I think about. You don't have any other options.''

The Mexican government, saying it is concerned about thousands of workers like Gomez, planned to launch a campaign in Los Angeles and Chicago to make sure people are not losing unnecessary dollars when they send money to loved ones back home.

Officials say a lot of the cash sent back to Mexico is eaten away by high costs, lost transactions or low exchange rates.

It's no surprise the government is taking notice. Last year, Mexicans living in the U.S. sent nearly $5 billion to Mexico - the third-largest money maker for the country's economy behind oil and tourism, according to figures from the Los Angeles Mexican Consulate.

That means big business for the U.S. Postal Service and companies such as Western Union, MoneyGram, Ria Envia and Orlandi Valuta that wire money between countries. Other services include money orders and courier services.

Mexican officials said the campaign, prompted by consumer complaints, is aimed at convincing immigrants to seek out the best options for money transfers. A Spanish-language ad blitz will provide a free telephone number to get money transferring tips, such as comparisons of various fees.

``People don't realize how vital it is for Mexican families to get their money to family ... They work so hard to get it,'' said Alberto Aviles, a spokesman for the Mexican Consulate here. ``They feel frustrated because sometimes a snag in the system eats up a big chunk of their money.''

If the program goes well, it will be expanded to other cities including Houston, New York, Denver, San Antonio and Phoenix.

Mexican officials said a study of the industry found that Western Union charged $35 to wire $300 from Chicago to Mexico, while the same transaction from Los Angeles cost $12. A Western Union agent said the current Chicago fee is $12, however.

Officials also say people should shop around for low service charges, promotions and for good exchange rates. For example, some money-transfer locations might offer 8.10 pesos to the dollar, while the going rate is about 9.10.

Consumers should also con-firm the rate that their relatives are going to receive when they pick up the money, officials said.

Last year, Western Union and MoneyGram were sued for allegedly charging hidden fees to people transferring money from the U.S. to Mexico. The suit accused them of false advertising and failing to inform customers about currency exchange fees that were sometimes up to 10 percent of the total wired amount.

MoneyGram claimed the fees depended on the strength of a country's currency. Western Union Financial Services Inc. did not comment on the suit at the time.

Aviles said the major companies have indicated they plan on ensuring their agents in Mexico pay the agreed-upon exchange rate.

Pastor Herrera, director of Los Angeles' Department of Consumer Affairs, said he sees the problem as one of consumer education, not fraud.

In recent years the money transfer industry has become more competitive and reputable, he said, but consumers need to do some investigative footwork.

``The consumer can be in the driver seat if they take the time to do some comparative rate shopping,'' Herrera said.

He suggested seeking incentives. For example, he said, some deals offer three-minute calling cards so people can call relatives abroad to tell them their money is coming.

Still, there are people like Gomez who work overnight shifts and other jobs to make a living that might not have time for bargain hunting. Gomez said he always goes to the same downtown outlet of Bancomer that he has found reliable. He can pay as little as $10 for a $300 transfer.

Gomez said he has gotten used to paying a price.

``I just know that it will take money to send money,'' he said.

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