Money Exchange Rip Off

[julie_f]

We lost around a large amount when we got sent some money a while ago. The person that arranged it hadn't done it before and agreed to the money being changed in the UK. Got a rate of 62 to the pound when the rate here was almost 69.

I use first Direct and they give you the choice. The last time i did it the person on the phone actually said it would be better to send it in pounds and get it changed here. They know exactly what the situation is, thats how they make these huge profits.

[Maestro]

I use the Bangkok bank and they do not charge any commission of any kind.

The Thai banks don’t physically collect the commission from you; they deduct it before crediting your account.

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Maestro

[Maestro]

If you've still got the transaction request for which explicitly states you wanted AUD sent, then you have a huge cause for recompensation.

The OP’s brother gave the payment order partially in writing and partially verbally:

…he went in the bank which was put his atm card under the window with a slip of paper containing all my details. He then told them he wanted to send $5000 or $3000 to that account in Thailand.

It looks like he had the bank teller fill out the payment order form and probably was then asked to sign it. Not sufficient cause for a claim for compensation, I fear.

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Maestro

[opengoal]

Some great advice and info from you all... thank you. It looks as I always feared its a 50/50 situation. Can anybody tell me what may be contained in the letter my brother is required to sign if we accept the $550

[opengoal]

The only satisfaction( apart from $550) I will get from this, is that amongst the 1000+ viewings on this thread there will be people who have been making the same mistakes I made and that in the future they wont let the banks stiff them on currency exchange.

I have to believe that this thread will costs the banks a lot more than the other $550 they wont reimburse me. I may sleep easier tonight knowing that today the common man has achieved a small but significant victory. The devil in me says I should send this thread link to the banks area manager( only when hes pay me of course). At least robbers wear masks

[Smithson]

I have to believe that this thread will costs the banks a lot more than the other $550 they wont reimburse me. I may sleep easier tonight knowing that today the common man has achieved a small but significant victory. The devil in me says I should send this thread link to the banks area manager( only when hes pay me of course). At least robbers wear masks

Not sure about that, threads like this have been running for ages on TV, yet it still happens.

I've had customers get it right the first time, but on follow trips to the banks they've forgotten to insist on sending local currency and have been stung. Rather than blaming banks, some have blamed me for asking for the missing cash.

I think ppl only really remember when they've been hurt financially.

[bendix]

It seems there is no point debating this issue.

PCA is convinced it is a scam (because it fits his victimised worldview) and while many members are methodically trying to explain that it is, in fact, something very different, he replies with a huff: "You believe what you want, I can't be bothered to explain it."

So, there we are. Thaivisa debate at its best.

The bank offered $500 back, not because they did anything wrong?

So, there we are. Thai visa reasoning at its best.

You might try learning to read.

Noone is saying the bank didnt mess up. They were clearly asked to send in A$ and in fact sent in Baht. That was their error. And that is why they rightly offered compensation.

PCA extrapolated from this that it is a scam, with the implication being the bank profited in some way. They did not profit as several very patient posters have tried to explain.

A mistake? Yes. And well done to the bank for compensating it. A scam? Of course not. At that is the whole thing in a nutshell - when some members experience something which is not to their liking the easy recourse is to shout 'AWWWWWW, NOT FAIR, EVERYONE HAS GOT IT IN FOR ME.'

[Smithson]

Just out of curiosity, the bank would have standard procedures, so how is it that they can 'accidentally' mess up like this?

Also, in the case of a UK bank, they have a box to tick if you want them to send local currency and not do the conversion themselves. If you don't tick their standard procedure is to convert. Why would they do this if the only difference is the customers looses?

[opengoal]

This is not a quote but the course the conversation took when my brother and the area manager where in conversation. The AM was not aware that we had checked the exchange rate on my Thai Bank website and calculated our losses at the exact time the money was deposited ie. 09.15 and 09.02 .

The Am asked him how much money was missing to which my brother did not reveal any of the above. Out of the blue the AM offered $550(not bad guess that was half my $1100 in asituation he could not resolve). The point from this being that the Am follows his training and waits for the customer to state an amount(thinking the monkey does not know how to check the rate). If my brother would have said about $400 you can bet your last cent thats what he would have got and to boot aren't the banks wonderful they refunded all my losses. I think it was PCA that said that the bank did not profit in anyway but another poster said they made commissions on off shore exchanges. Can somebody please clarify. Do they make any commissions in any way or do the banks they prefer to exchange with make commissions

[opengoal]

The issue here is not if the bank profitted but that the customer lost again. It makes the mind boggle to think how many complaints banks receive over this issue worldwide. If it was the bank who was losing out there would be procedures the next day.

So we have to assume 1 of 2 things. The banks make profit or they dont give a rats ar$e about the customers. Both theories carry gallons of water.

"A mistake? Yes. And well done to the bank for compensating it"

Bendix you admit a mistake( i know it was the banks mistake) so they are not compensating me they are giving me half my money back

Me thinks you have a Barclays Bedspread , an HSBC pillow and a Bear named Natwest

Edited November 9, 2007 by opengoal

[JimmyCA]

Know the game

Or you will be scammed every time

[sonicdragon]

This is not a quote but the course the conversation took when my brother and the area manager where in conversation. The AM was not aware that we had checked the exchange rate on my Thai Bank website and calculated our losses at the exact time the money was deposited ie. 09.15 and 09.02 .

The Am asked him how much money was missing to which my brother did not reveal any of the above. Out of the blue the AM offered $550(not bad guess that was half my $1100 in asituation he could not resolve). The point from this being that the Am follows his training and waits for the customer to state an amount(thinking the monkey does not know how to check the rate). If my brother would have said about $400 you can bet your last cent thats what he would have got and to boot aren't the banks wonderful they refunded all my losses. I think it was PCA that said that the bank did not profit in anyway but another poster said they made commissions on off shore exchanges. Can somebody please clarify. Do they make any commissions in any way or do the banks they prefer to exchange with make commissions

I think you will find that PCA said that the bank profitted by the difference between the onshore and offshore rates, whereas I said that was not so and the bank would have "merely" (in comparison) made commissions by doing the exchange offshore. If the bank is an offshore dealer in thai baht then their "commission" would be the bid-ask spread, and if they are not then they would be paid some commission by the bank they dealt with. The exact details will be impossible to know.

[dr_Pat_Pong]

Alas, Banks are Banks. Bloody thieves.

[sonicdragon]

Alas, Banks are Banks. Bloody thieves.

Having worked for several I can concur.

[JimGant]

I use the Bangkok bank and they do not charge any commission of any kind. The sending bank (WBC) charges me $20 irrespective of the amount but the maximum per day I can transfer is $5000.

BB charges .25% to process incoming wire transfers, with a minimum of 200bt and a maximum of 500bt. And, as Maestro said, this fee is transparent. So, if you've ever wondered why you got less than the advertised TT rate, it's probably because you forgot to add back the fee before you did the math.

Therefore, he invoices the Australian importer in Baht and the importer obviously will instruct his bank to remit exactly that Baht amount.

I would assume, however, that the prudent importer would first send dollars to Thailand and have "his bank" in Thailand remit the baht...........

The Royal Bank of Scotland has a box to tick if you don't want them to do the conversion, but they don't point this out to customers.

So do many US banks, including Suntrust. When I first wired money to Thailand from my Suntrust checking account, I naturally (I thought) filled in the amount to be sent in dollars, not even knowing I had the option to send baht. Then I saw the little check block that said "US Dollars." Well, duh, of course US dollars -- what other currency is in my checking account...and can't they see the dollar symbol next to the amount I had just filled in? So, to humor them, I checked the block.

Talk about dumb luck, as even back in those days, before this onshore/offshore artificiality, you paid a steep penalty to convert in your home country. So why would anyone ever do this -- unless you thought the baht was going to appreciate bigtime in the day or so it takes for the dollars to get to Thailand.

Does anyone see any other scenario where you'd want (or have to) convert to baht at home?

[opengoal]

"Does anyone see any other scenario where you'd want (or have to) convert to baht at home"

Thank you Jim for that comment,that is the best one liner in this thread. There is no earthly reason why any individual or that matter any company would want thai baht sending from Australia.

Edited November 11, 2007 by opengoal

[sonicdragon]

"Does anyone see any other scenario where you'd want (or have to) convert to baht at home"

Thank you Jim for that comment,that is the best one liner in this thread. There is no earthly reason why any individual or that matter any company would want thai baht sending from Australia.

On the contrary......

If you ignore the problem of thailand having an artificially higher offshore rate, and bear in mind that when onshore/offshore rates have existed in other countries in the past is has often been the onshore rate that was higher, then you should bear in mind that in international trade finance, exporters often require payment in their local currency. For small and medium sized amounts, usually the easiest, and standard way to send the required amount of local (to the exporter) currency is for the importer to exchange the money offshore and remit it to direectly to the receiving bank.

In order to take the other side of this argument, you have to make it the responsibility of the bank to know the details of, and give advice on, these onshore/offshore rate issues which in themselves are usually the result of government policy which can change in a heartbeat. Maybe some banks would offier this advice, but the large majority would not. The mahority of banks making cross-border funds payment for their customers are simply carrying out their customers' instructions. Obviously if the customer made a clear unambiguous request to remit a particular currency and the bank did not do as the customer requested there are strong grounds to claim compensation, but in my experience banks cover themselves quite well. That said, the fact that the australian bank in this case offered to some compensation indicates to me that maybe they did make a mistake.

[JimGant]

exporters often require payment in their local currency. For small and medium sized amounts, usually the easiest, and standard way to send the required amount of local (to the exporter) currency is for the importer to exchange the money offshore and remit it to direectly to the receiving bank.

The importer would have to be daft to do this vis-a-vis Thailand, with currently a greater than 6% spread between offshore and onshore rates (using the USD). That's probably more than the profit margin many importers receive. So obviously the prudent importer instructs his bank to send dollars, at least under the current conditions, and the receiving bank converts it to baht and pays the exporter. And why converting offshore is the "easiest" way doesn't quite resonate.....Just check that box that says 'send dollars.'

bear in mind that when onshore/offshore rates have existed in other countries in the past is has often been the onshore rate that was higher

Yep, particularly third-world countries trying to prop up their overvalued currency. So, yeah, in this scenario the importer converts offshore. But we're talking Thailand, where ever since I started wiring money (1999), converting onshore has always been the better deal. (Maybe pre-1998, when the baht was hardwired 25-to-1 against the dollar, things were different. I don't know.)

Nothing MBAish about this. Importers certainly follow every nuance of currency fluctuations. Their livelihood depends on it -- that's why most hedge against it. Actively deciding (or having their bank do it) on what side of the pond to convert seems like a no-brainer to me. But for us expats wiring beer money, I guess we can be forgiven for converting on the wrong side -- at least the first time.

[sonicdragon]

exporters often require payment in their local currency. For small and medium sized amounts, usually the easiest, and standard way to send the required amount of local (to the exporter) currency is for the importer to exchange the money offshore and remit it to direectly to the receiving bank.

The importer would have to be daft to do this vis-a-vis Thailand, with currently a greater than 6% spread between offshore and onshore rates (using the USD). That's probably more than the profit margin many importers receive. So obviously the prudent importer instructs his bank to send dollars, at least under the current conditions, and the receiving bank converts it to baht and pays the exporter. And why converting offshore is the "easiest" way doesn't quite resonate.....Just check that box that says 'send dollars.'

bear in mind that when onshore/offshore rates have existed in other countries in the past is has often been the onshore rate that was higher

Yep, particularly third-world countries trying to prop up their overvalued currency. So, yeah, in this scenario the importer converts offshore. But we're talking Thailand, where ever since I started wiring money (1999), converting onshore has always been the better deal. (Maybe pre-1998, when the baht was hardwired 25-to-1 against the dollar, things were different. I don't know.)

Nothing MBAish about this. Importers certainly follow every nuance of currency fluctuations. Their livelihood depends on it -- that's why most hedge against it. Actively deciding (or having their bank do it) on what side of the pond to convert seems like a no-brainer to me. But for us expats wiring beer money, I guess we can be forgiven for converting on the wrong side -- at least the first time.

You seem to have missed my point, which is that it is up to the importer to give the right anambiguous instruction to his bank, and not up to the bank to make inquiry about or give advice on the currency regime of the receiving country. If the bank does not follow the instruction then the importer has grounds for compensation.

[JimGant]

You seem to have missed my point, which is that it is up to the importer to give the right anambiguous instruction to his bank, and not up to the bank to make inquiry about or give advice on the currency regime of the receiving country. If the bank does not follow the instruction then the importer has grounds for compensation.

You seem to be confusing the occasional beer money wire with repetitive invoiced expenses across currency borders. In the latter, the importer would most certainly acquire the services of a financial institution acting as his agent. It's not even a stretch to imagine this agent receiving the invoices, making the assessment of where to convert, then forwarding the result to the receiving bank/agent in Thailand. It's not necessary, if conversion is to be in Thailand, that the exact amount of dollars sent converts exactly to the invoiced amount in baht. Ballpark conversion is good enough, since the importer's account in Thailand most likely carries a buffer (a big one if he's long on the baht), and also most likely there is an arrangement with the Thai bank/agent to cover any miscalculation of exchange rates.

But the point I was really addressing was your ''it's easiest to convert offshore" statement. It may be the easiest if for some reason you wanted to wire the exact amount, down to the last satang. But it would also be the dumbest with a 6% spread between offshore and onshore.

And even if I was just an insignificant importer, I know I could find a full service bank that has more than just mannequins as employees. Isn't finding the best exchange rate taught in Banking 101?