Banks siphoning money in wire transfers

[jgombos]

What is the name of your state (only U.S. law)? CA

When it comes to wire transfers, I'm finding that banks know only what they charge, and refuse to disclose what intermediate banks skim from a wire transfer. I'm shocked that this practice is legal. I'm told that all the intermediate banks that handle the money can basically take what they want, and consumers are forced to blindly play this fee lottery. Suppose I wire money, and siphoning happens. Is it legally actionable? Or would I get laughed out of the courtroom?

[Antigone*of*Greece]

Originally Posted by jgombos

What is the name of your state (only U.S. law)? CA

When it comes to wire transfers, I'm finding that banks know only what they charge, and refuse to disclose what intermediate banks skim from a wire transfer. I'm shocked that this practice is legal. I'm told that all the intermediate banks that handle the money can basically take what they want, and consumers are forced to blindly play this fee lottery. Suppose I wire money, and siphoning happens. Is it legally actionable? Or would I get laughed out of the courtroom?

There would definitely be riotous laughter on your way out of the courtroom. In addition, you do know that many of these intermediary banks are out of the U.S. jurisdiction, right?

[jgombos]

Originally Posted by Wirelessany1

In addition, you do know that many of these intermediary banks are out of the U.S. jurisdiction, right?

Only 12 banks in the US can directly accept an international wire. All other banks in the US must work through one of those 12 fedwire member banks, or another bank that channels the money through one of the 12.

[Antigone*of*Greece]

Originally Posted by jgombos

Only 12 banks in the US can directly accept an international wire. All other banks in the US must work through one of those 12 fedwire member banks, or another bank that channels the money through one of the 12.

Okay, any one of those banks and the other intermediary banks involved will all take a fee.

Look at it this way: Money is a widget. It takes money to move widgets from here to there. You have asked for your widget to arrive at a destination ~ there will be a cost associated to that.

It is a nasty fact ~ just deal with it. You filing a law suit over an intermediary bank taking a fee would be a huge waste of time and even bigger loss of your own widgets.

[jgombos]

Some banks have figured out how to move widgets (money) at no cost to the consumer. Others have not.

The problem is, the ones who haven't can take money from someone they don't have a contract with (the end client, as opposed to the bank they received the money from).

If Peter has an agreement with Paul, and Bob has an agreement with Peter to take Paul's money, but Paul has no relationship with Bob, any reasonable person (judge) would call it theft if Bob takes Paul's money.

[debtcollector`]

If you don't like it you are free to not use their services.

DC

[jgombos]

Originally Posted by debtcollector`

If you don't like it you are free to not use their services.

DC

That's not the case. I chose the services of bank A (not the services of bank B). A bank that I don't have a contract with took my money. I had no choice in the matter.

I don't get to even see bank B's contract with bank A -- I'm not even told that bank B is involved.

Mary may negotiate a deal with Olivia to move her widgets, and be quite content with the negotiation. But when Olivia decides to subcontract the movement to Leroy, and instead of paying Leroy she says to Leroy "Mary doesn't even know you're involved - keep as many of Mary's widgets as you want". Leroy (who does not have a contract with Mary) is effectively stealing. What's Leroy's legal defense for taking some undisclosed number of Mary's widgets? How does a lawyer argue that Leroy didn't steal from Mary?

[mmmagique]

When I worked for a UK company, my bank (fifth third) charged a $15 fee for incoming wire transfers but I never had to deal with any intermediary charges.

Boa only charges $10. but I don't know if they are one of the 12. (although I imagine they very well may be.)

[jgombos]

Originally Posted by mmmagique

When I worked for a UK company, my bank (fifth third) charged a $15 fee for incoming wire transfers but I never had to deal with any intermediary charges.

Boa only charges $10. but I don't know if they are one of the 12. (although I imagine they very well may be.)

If you were only charged what you were quoted up front, you are simply lucky. You played the wire fee lottery, and won. BofA or Fifth Third could have very well routed your wire through banks that siphon money, and it would have cost you more than the quote.

[I_Got_Banned]

Originally Posted by jgombos

If you were only charged what you were quoted up front, you are simply lucky. You played the wire fee lottery, and won. BofA or Fifth Third could have very well routed your wire through banks that siphon money, and it would have cost you more than the quote.

As far as I know (and I have been wiring and receiving money internationally ever since the days when they used to use "TELEX") it is the customer's responsibility to identify the intermediary bank as part of the wire transfer instructions given to the bank where the transfer will originate. Or at least that has been my experience with intermediary banks. So they don't get to route it which ever way they want to so as to siphon and extra $10 out of it. In fact, more often than not, and if you were to read the wire transfer form it will say that the bank is merely acting as your agent and is simply following your instructions. That way they're not liable if your outgoing transfer ends up in some guys account in Nigeria where you'll never see it again!

I've been sending and receiving Int'l wire transfers ever since the days when they used the old Telex system and have done so through banks as well as brokerage firms and yet I cannot remember a single instance where I paid a red cent to an intermediary or having ever paid more than $15 per transfer.

It boils down to this... Money, and if it can be wire transferred, it can also be moved. If you're unhappy with your bank, you oughta try to play the wire fee lottery yourself; the odds are with you that you'll land it in a bank that will not mislead you or conspire against you by siphoning your money.

[mmmagique]

I wasn't lucky. I read forums in which people who did the same type of work as I for UK companies discussed wire transfers and fees.

I also called my bank (twice) to make sure there would be no other fees.

[jgombos]

Originally Posted by mmmagique

I wasn't lucky. I read forums in which people who did the same type of work as I for UK companies discussed wire transfers and fees.

Sure, if someone is going to test the waters on a particular path and report back, of course you have some degree of certainty -- more certainty than you can ever expect a bank or broker to have.

Originally Posted by mmmagique

I also called my bank (twice) to make sure there would be no other fees.

If the banker turned out to be correct, that's again getting lucky. Bankers are wrong about half the time, particularly with any kind of international transaction. Just the other day a banker told me I would get 1.45 usd for every euro I send. A banker is the least reliable source of information.

[jgombos]

Originally Posted by I_Got_Banned

As far as I know (and I have been wiring and receiving money internationally ever since the days when they used to use "TELEX") it is the customer's responsibility to identify the intermediary bank as part of the wire transfer instructions given to the bank where the transfer will originate.

Precisely the problem. Liability is shifted on to the client, who is obviously ill-equipped to discuss contracts that they aren't a party to - or even discover the parties involved. This is the enabler for banks to be vague and careless.

Originally Posted by I_Got_Banned

Or at least that has been my experience with intermediary banks. So they don't get to route it which ever way they want to so as to siphon and extra $10 out of it.

Of course they do. I've seen it myself. Banks choose who they want to handle the money. Clients don't have the option of selecting intermediary banks. What wire transfer form let you have the option to specify the all the banks in the chain?

Originally Posted by I_Got_Banned

In fact, more often than not, and if you were to read the wire transfer form it will say that the bank is merely acting as your agent and is simply following your instructions.

Sure, that's called a disclaimer. Again, a shift of liability on to the client, so when the hidden fees hit, the clients legal recourse is diminished. The disclaimer protects the bank, not the client.

Originally Posted by I_Got_Banned

I've been sending and receiving Int'l wire transfers ever since the days when they used the old Telex system and have done so through banks as well as brokerage firms and yet I cannot remember a single instance where I paid a red cent to an intermediary or having ever paid more than $15 per transfer.

I'd be curious what jurisdiction and circumstances have given you transparency (if not pure luck). I just sent a SEPA wire within eurozone from a bank that states all outbound wires with a eurozone destination incur no fees - and it went to a broker who guaranteed no fees on their end. Yet money was siphoned. It wasn't much, but it was an undisclosed hidden fee.

Europeans report having the same problem - and it's particularly nasty when purchasing a product or service, where the amount must arrive in full. A colleague's transfer was skimmed just a few euros by an intermediate bank, and the recipient was shorted, and would not send the product. When he called the bank to complain about the siphoning, he was told to mail the cash difference to the recipient (because if he had wired the difference, that too would be siphoned by some undisclosed amount).

Originally Posted by I_Got_Banned

It boils down to this... Money, and if it can be wire transferred, it can also be moved. If you're unhappy with your bank, you oughta try to play the wire fee lottery yourself;

You don't get it. The only way to not play the wire fee lottery (officially) is to not send a wire. As a practical matter, the only way to send a wire with some degree of not getting money skimmed is to find someone who has sent from the same bank to the same bank, and based on their experience of winning the lottery, you wire through the same path.

Originally Posted by I_Got_Banned

the odds are with you that you'll land it in a bank that will not mislead you or conspire against you by siphoning your money.

I have a broker right now who has my money, and cannot for his life quote the cost of the wire, even when I provide the BIC for the destination. His brokerage is at the mercy of the partner bank. All he can tell me is what other customers feed back to him on what is charged. He says the average is roughly 14 GBP, but it's never exact. He was on the phone for half an hour with his payments department, who was talking to the first bank the money passes through. Another broker from the same firm told me before I sent the money that there was no fee on his end. What he neglected to tell me was what the intermediary bank was charging. So the money got siphoned on the way in, and it will get siphoned on the way out.

This is common. If you've found a competent banker who is diligent about collecting feedback on what fees end up getting applied, you should stick with that banker. But certainly you cannot extrapolate your experience across how all banks operate, because you've not experienced a bank telling you they cannot quote the wire cost. I have yet to find a bank that can accurately quote a wire cost - or even so much as name the banks in the path.