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Groups boycott Western Union

Immigrant advocates say it charges exorbitant fees for money transfers while failing to reinvest in the community.

September 11, 2007|Andrea Chang | Times Staff Writer

Four months ago, Gwen Gampon wired $1,030 to her brother from a Western Union Co. outlet in Anaheim during a family emergency.

In Hawaii, her brother, who is unemployed and doesn't have a checking account, ended up with just $950 -- after the money-transfer company deducted a $79.99 fee for the immediate transaction.

"Western Union is seen as a lifeline," said Gampon, a refinery worker from Garden Grove. "That lifeline, however, has an ugly side that preys on those that are already in financial need."

Sending money to less-affluent relatives is an age-old practice that grows more popular every year because of robust immigration and improved technology. In Southern California, Latinos have long depended on electronic transfers to send money for food, medical care and education to their families back home.

Now, 158 immigrant advocacy groups from around the country are accusing Western Union, the largest U.S. money-transfer company, of charging exorbitant fees while failing to adequately reinvest in immigrant communities. In Los Angeles on Monday, the groups launched a nationwide boycott of Western Union, demanding that the Englewood, Colo.-based money-transfer giant lower its fees and put some of its profit back into the communities that use its services.

"Today, we ask consumers to use other money-transfer services," said Francis Calpotura, executive director of the Transnational Institute for Grassroots Research and Action, during Monday's news conference and protest march. "We understand that this might cause some inconvenience in the beginning, but this is the only way we can deliver a powerful message to Western Union."

In response to the complaints, Western Union said its rates were in line with similar money-wiring services, such as Minneapolis-based MoneyGram International Inc.

"We're proud to provide fast and reliable trusted services at competitive prices," spokesman Daniel Diaz said. "If you look at the marketplace, consumers today have choices -- more so than they ever did before."

The dispute underscores the growing demand for affordable and fast money transfers. The World Bank estimated that in 2005, poor nations received more than $250 billion in receipts from international workers, more than all foreign aid combined.

Western Union, which handled 147 million consumer-to-consumer money transfers last year, said it controlled 17.4% of the global remittance market. Transaction fees vary depending on the amount sent, its destination and how quickly the funds are disbursed. To instantly wire $1,000 or less to Mexico City, for example, Western Union charges a transaction fee of $14.99, a company spokesman said.

But customers, many working low-wage jobs, said the fees were too high. The groups didn't specify what they considered a fair fee, but cited a World Bank report saying that Western Union could cut its fees by a third and still generate profit comparable to its rivals.

"What you're sending to your family isn't what they're receiving," said Martha Ugarte, 25, a media volunteer with the Transnational Institute for Grassroots Research and Action.

The money-transfer market has boomed in recent years. Last year, the World Bank released a report that found international remittances received by developing countries had doubled in the previous five years.

Over the last two decades, dozens of entrepreneurs have entered the business, driving down prices and providing more options.

Mainstream banks, which not long ago snubbed immigrant workers, have boosted their money-transfer services to meet demand. In 2004, Wells Fargo & Co. partnered with Mexico's Grupo Financiero Banorte to increase its wire-transfer outlets by more than a third in that country. Four months later, Bank of America Corp. announced it would soon eliminate all transfer fees to Mexico for customers with a checking account.

But Ugarte, whose parents send money to relatives in Mexico every month, said many immigrants believed that they had "no choice but to go to Western Union," which has about 312,000 sites in more than 200 countries.

In her grandmother's town in Oaxaca, Ugarte said, there are no banks -- but there are three Western Union outlets.

"Banks just don't exist to a large degree in low-income communities," Calpotura of the institute said. And aside from the accessibility of Western Union, many immigrants don't feel comfortable at mainstream banks, where they usually have to provide identification and other documentation, he said.

Immigrant advocates are asking Western Union to adopt what they are calling a "transnational community benefits agreement," which would lower remittance fees, establish more favorable exchange rates and provide for community reinvestment.

According to the groups, Western Union reinvests only 41 cents for every $100 of profit, compared with $2.30 reinvested by Wal-Mart Stores Inc. and $7.50 by Ben and Jerry's. The proposal would require Western Union to reinvest $1 per transaction.

"I'm not sure where they're getting those numbers from," said Diaz, who added that Western Union contributed to natural disaster relief and non-profit organizations around the world, including in Mexico, India and the Caribbean. "Western Union is empowering communities through its global foundation."

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andrea.chang@latimes.com

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