30th September 2015
A landmark ruling by the advertising watchdog against an online currency company could see a clampdown on misleading conversion rates.
The Advertising Standards Authority’s decision against WorldFirst.com could save consumers millions of pounds if other providers are forced to change their practices, it has been claimed.
Eris FX, a Yorkshire-based online currency company, brought the original complaint against WorldFirst.com, which claimed that its online currency conversion calculators promised consumers thousands of pounds in savings that they could not deliver, because they were based on inter-bank rates not available to the general public.
Eris FX says the converters are widely used by specialist currency providers on websites aimed at overseas property buyers, a market estimated to be worth around £40 billion a year in the UK. They appear to show how much a potential customer would be charged for their foreign currency, but in reality they only return the ‘interbank’ or market exchange rate which is the rate that banks buy and sell to each other at but is not an achievable rate for consumers.
The company says it has been campaigning for a long time to have this practice recognised as misleading to consumers. In February it wrote to the FCA, which authorises money transfer companies and asking the regulator to act. Eris then turned to the Advertising Standards Authority who investigated the converters and found that they contravened the CAP code on advertising on four counts.
Helen Scott, founder of Eris, says: “We are delighted at the ASA’s ruling. This will end a misleading and confusing practice that has potentially cost British consumers millions of pounds over recent years because they don’t understand the difference between a customer rate which includes the broker’s fee, and the market rate which doesn’t. On a substantial trade this difference could be thousands of pounds. Showing only the market rate is patently unfair to consumers and doesn’t allow them to shop around.”
Currency companies and currency comparison sites will now be forced to either show an achievable customer exchange rate or take the converters off their websites.
Eris FX says it uses live customer rates on its website which update automatically every second. The rate on its currency converter includes all Eris FX’s fees and margin.
Scott adds: “Consumers mistakenly think the rates on other companies’ sites are better than ours but they are not because they don’t include the currency companies’ costs.
“I’m determined to change the industry for the better and not join in the dubious practices that currently prevail.”