Money transmitters that provide clear disclosures on rates and fees could earn the same type of brand approval used to endorse coffee beans and tuna fish.
The Washington legal advocacy group Appleseed has partnered with money transmitters including Wells Fargo & Co. to test a seal-of-approval program for remittance companies that provide customers with the clearest details about transaction costs.
Ann Baddour, a senior policy analyst for Appleseed and the author of a report issued Thursday on improving disclosures, said "the idea was to take the Better Housekeeping seal, or the Fair Trade coffee or the dolphin-free-tuna seal … and apply it in the context of a financial service … so that consumers know that when a business displays this logo that they are complying with specific standards."
The pilot test, also announced Thursday, is intended for immigrants sending money home. It is in part the result of a 2005 Appleseed study that found that fluctuating exchange rates made remittance costs confusing for consumers in the U.S.-to-Mexico corridor.
Wells, along with the $80.8 million-asset Mitchell Bank of Milwaukee, GroupEx Financial Corp. of La Mirada, Calif., and Viamericas Corp. of Bethesda, Md., will provide updated rate and fee information as part of the pilot test.
James P. Maloney, Mitchell Bank's chairman, said better clarity could help his bank win business from immigrants.
"One of our goals is to use remittance services to bring migrant or unbanked people into the financial system here in the United States," he said.
"If people understand that we are willing to disclose everything up front … we can build some trust."
Mitchell is providing the rate information on its Web site as well as in branches in Milwaukee.
Ms. Baddour, however, said money transmitters were often hesitant to provide standardized pricing details before a transaction, because exchange rates can differ throughout the day and from one agent location to another.
She said the disclosure forms were created to be "meaningful for consumers" but still be "feasible for the industry to implement."
During the pilot test, each participating company will provide disclosures for one destination country.
Appleseed said a more comprehensive program could include rate information for additional destinations and could be updated to account for approximate exchange-rate changes.
MoneyGram International Inc. participated in the panel that created the disclosures, but it is not participating in the pilot test. Nor is Western Union Co.
Spokespeople from MoneyGram and Western Union were not available for comment by press time.
Daniel Ayala, senior vice president for Wells Fargo's remittance business, said "it's the right thing for our customers. They need to know and understand what they buy from us. It's something that any company in the remittance business should participate in."
Appleseed said it planned to review the program after three to six months and would try to get more money transmitters to adopt the disclosures if the test proved successful.
