The Consumer Financial Protection Bureau on Friday issued new rules governing remittances, which are often used by immigrants to send money to family back home.
The rules also require companies to disclose any fees, the exchange rate and the amount that will ultimately be paid out to the recipient in local currency. Companies will also be required to investigate disputes and to give customers at least 30 minutes to cancel a transaction.
The rules take effect after one year.
The CFPB, which was created as part of the nation's overhaul of financial regulations, was required by law to issue the rules on remittances by Jan. 21. International money transfers previously had not been subject to federal consumer regulations.
Frustrations with the industry include complaints about hidden costs, missing funds or funds that never arrive at all, according to Ruth Susswein, a spokeswoman for Consumer Action, an advocacy group. She said customers can also face difficulty getting companies to resolve such problems.
The CFPB noted that consumers transfer tens of billions of dollars from the U.S. to foreign countries each year. Richard Cordray, who was appointed as the agency's first director this month, noted that the new rules will help consumers compare prices and hold companies accountable for any errors.
"People sending money to their loved ones in another country should not have to worry about hidden fees," Cordray said.
A Western Union Co. spokesman, Tom Fitzgerald, said the company plans to be compliant with the rules by the effective date. He said the company already provides customers with disclosures on fees, exchange rates and payouts.
"We agree that consumers will benefit if all remittance providers are held to the same requirements," he said.
MoneyGram International Inc. also said in a statement that it gives customers information about fees and rates and responds to complaints in a timely manner. The company said it is reviewing the rules to see if any adjustments will be needed.