WARNING: AMEX Exch Rate Errors

[Danger]

An update on my situation. Logging on to my AMEX account this morning I find I've got a $40.71 'exchange rate credit adjustment'. I phoned AMEX and they told me that this is the dispute I lodged earlier in the week and the dispute was now closed. No, no, I said. I disputed an overcharge of $136.78, not $40.71. I asked what rate they used to determine this amount and she said 'there's no note on your file but I can assure you that the exchange rate used would have been correct' (the latter part she mentioned no less than five times). She tells me that forex transactions are firstly done by computer but if they're disputed they get done by a person in their 'back office'. Then the runaround started again! She told me that if I wanted to find out the rate used on that day I'd need to phone AMEX foreign exchange on 1300 727169.

This I did and, just like last Friday when I was told to phone them, they told me they have nothing to do with card rates and told me to phone 1300 727169 - the number I phoned to get their number (twice)!

So the nice lady transfers me back and I get a different operator (in Melbourne). She confirms that 'you just want to know what the conversion rate is for that day, is that correct?' and I say yes. On hold I go and a couple minutes later she comes back with 'I can't tell you exactly that this is correct but the rate was about 6.744165 rand to 1AUD. Intersting, I say, that means I've been overcharged $556, rather than $136. 'We do go by the local bank rates at that time,' she adds as another cop-out then 'let me put you on hold' (again).

About four minutes later she comes back and says she's checked with somebody else and the rate that day was 6.59 rand to 1AUD and 'we take this from the local bank'. Right, I say, so that means I've been overcharged $177. Amazingly she then says 'generally we use whatever is easier'. Unbelievable.

I'm blown away by their apparent rate-plucking from thin air. Every person you speak to has a different idea about how the rate is calculated and every person gives you a different rate used.

After being put on hold for another seven minutes (during which time I imagine her and her supervisor were waiting for me to hang up) she came back yet again and said 'I've just spoken with another department and basically we can't dispute the transaction unless you've got proof of a different rate'. I have the proof, I say. Let's dispute - again!

I'm putting all this information together and referring it today to my solicitor. This is absolutely rubbish.

 

[markis10]

Getting charged in AUD is not the best idea unless you ask a lot of questions at the time, see: Buyer Beware: Dynamic Currency Conversion (DCC) | Travel Guide For Your Finances

The merchant sets the exchange rate for this and is able to add fees that fall outside the t&c's of most cards, choice also feel its a risky choice:

CHOICE - Buying guide: Travel money

 

[medhead]

I'm blown away by their apparent rate-plucking from thin air. Every person you speak to has a different idea about how the rate is calculated and every person gives you a different rate used.

Um, Have you read this whole thread in particular the post that states the T&C related to currency conversion. Basically, they state outright that they pluck whatever rate they want.

Not that I don't agree with you but the fact is they state up front that they will pick whatever rate they can find for that day from a range of possible sources and the rate they pick doesn't have to be the same as the rate they got for your actual currency transaction.

 

[glass]

amex takes a 1.5% cut and your bank takes another cut too.

 

[Therma]

After having a severe talk to the customer relations at Intercontinental Coex Seoul, they have agreed to refund the USD charge and rebill me in KRW. My approach was that I was not notified that I would be billed in USD and not asked which I preferred. I told the manager that when I booked the hotel the charge was quoted in KRW, and that ICG uses Oanda on their website to calculate the amount that I will have to pay in USD. They will also enter on my profile that I want to be billed in local currency. That saved my company 88USD ( about 12% of the bill)

Will just have to pay more attention in the future.

As for AMEX Singapore still waiting for them to get back to me regarding the Japan discrepancy. They promised to get back to me by close of business today. They have 38 minutes!

 

[Therma]

I need some advise. Of course the close of business call from AMEX manager did not happen. I managed to get through to another trained monkey who advised me that the bill was entered by hotel on 27th not 21st of October, which explained the excessive charge (which she claimed included 2% FOREX commission)

Well, a) not according to XE.com

Date on transaction receipt:October 27, 2008Amount on transaction receipt:58,400.00 JPYMid-market rate for JPY to SGD on 2008.10.27:
(Excluding bank charges)0.0162149Value of transaction in your currency:
(Excluding bank charges)946.95 SGDAmount shown on credit card statement:994.00 SGDYour "hidden" fee estimate:0.00 SGD ( 0.000% )ACTUAL BANK FEES for this purchase:47.05 SGD ( 4.969% )

Just had a heated conversation with the AMEX manager who referred me to the foreign currency section on my statement. According to that: all foreign currency amounts get converted to USD then to SGD, with a one off 2% commission. Well I put that through OANDA and came up with SGD 954.90. Again, this is NOT 994SGD,

They are supposed to call me on Monday to try to resolve an issue.

Now, is it my problem that hotel has not consolidated the payments until 27th even though they swiped my card and received authorisation on 21st? I certainly do not remember any incidences when I had a windfall directed my way when overseas currency changed dramatically in my favour. Am I within rights to lodge a claim against the hotel as disputed bill? Or who do I blame? And AMEX is still 5% out not 3%

I could just ignore it all and lodge a copy of my AMEX statement to the company. I just do not want the coughs (whoever they are) to get away with it!

 

[markis10]

AMEX can choose what rate they want as previously posted, its in the terms and conditions many of us dont read until something looks wrong or goes wrong :evil:

 

[Therma]

AMEX can choose what rate they want as previously posted, its in the terms and conditions many of us dont read until something looks wrong or goes wrong :evil:

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INFORMATION ABOUT THE AMERICAN EXPRESS CARD​

Please call us immediately if there are errors on
your statement, or if you suspect a fraudulent charge.
All foreign currency Charges have been
converted into Singapore Dollars on the date we processed the Charge.
Non-U.S. Dollar Charges have been converted through U.S. Dollars, by
converting the Charge amount into U.S. Dollars and then by converting
that U.S. Dollar amount into Singapore Dollars. U.S. Dollar Charges have
been converted directly into Singapore Dollars. As agreed, unless a
specific rate was required by law, the American Express treasury system
has used conversion rates based on interbank rates (selected from
customary industry sources) from the business day prior to the processing
date, increased by a single conversion commission of 2%. Any Charges
converted by third parties prior to being submitted to us have been​

at rates selected by them.

 

[Therma]

I wonder what their customary industry sources for the interbank rate are. Also I have not heard such bull**** as payment being processed at the rate on the day when merchant submits the bill. This does not take into account that some people may only factor on spending a certain amount in their own currency at the time of the payment. By the same token I can demand that I get exchange rate on the day of the statement. Basically they do not indicate anywhere that the exchange rate is calculated on day of submission, whether it is in their rules or their statement. To me 21 is 21, not 27!

 

[markis10]

(selected from customary industry sources) from the business day prior ​

Like I said , whatever rate they want, unless you have been able to get an explanation of what those sources are in your country (which would be different to most of us in Australia, as we are not subject to control of currency from the Monetary Authority of Singapore nor is our local AMEX operation) .

 

[ethernet]

The bit on DCC is close to the mark.
Going back to the Westpac Papers' and Swiss loans to farmers - seems ages ago it was revealed forex 'points stealing' was judged to be not illegal at the time. The fees were such that 'managed' accounts did worse than unmanaged accounts in many instances.

The bit about 'partners' is telling too, teamsters would be more like it. The ACCC is free to investigate if the bank profits by having its partner 'point steal' - which it indeed would.

Amex's 'problem' is having to explain how amounts varied on a 'fixed' rate, as this is going to amplify 'point stealing', as there may be disguised 'partners' creaming off bits along the way. Individually this may not be an issue, but if the transactions all go against the consumer - thats going to look bad in some circles.

However AMEX comes back, what you do is run multiple $equal dollar transactions over the course of the day with two different Amex cards,
This is because more can be 'earned' with 100% hindsight - say Perth Time Vs Sydney Time - thus a day can be more than 24 hours in the forex trade.
Banks can even queue the transaction and delay processing if it would work in their favour.

if these vary, a reporter cab run with a good story in fixed currency jurisdictions.

 

[medhead]

Now, is it my problem that hotel has not consolidated the payments until 27th even though they swiped my card and received authorisation on 21st?

This is quiet normal in my experience with Visa and AMEX. It is all about when the merchant sends in the charge and transaction processing can be delay by a few days, because of delays by the merchant.

As AMEX don't have to pay out any money until the merchant sends it in, then that seems normal that they do the conversion on the later date.

 

[Evan]

This is quiet normal in my experience with Visa and AMEX. It is all about when the merchant sends in the charge and transaction processing can be delay by a few days, because of delays by the merchant.

As AMEX don't have to pay out any money until the merchant sends it in, then that seems normal that they do the conversion on the later date.

So many hotels seem to use off-line transactions ! why i don't know, since i am sure they are on-line, sure maybe its get me away as quickly as possible and a regular customer presenting a platinum Amex charge card is hardly likely to be a risk but still seems strange.
E

 

[markis10]

So many hotels seem to use off-line transactions ! why i don't know, since i am sure they are on-line, sure maybe its get me away as quickly as possible and a regular customer presenting a platinum Amex charge card is hardly likely to be a risk but still seems strange.
E

Hotels use offline to process the final bill using the authorisation number obtained from your check-in online preauthorisation, otherwise the amount of your chackout and the preauthorisation would come of any credit limit in terms of available credit! At shops its exactly the same, even though its online they are getting an authorisation, settlement at the end of the day takes all the online charges (not preauthorisations) and offline charges and processes them by uploading them to the bank, this is usually a manual process that in theory could occur on a daily or weekly basis.

 

[oz_mark]

Still all quick compared to the days of swipe machines when a copy of the paper you signed had to make its way back to Amex before you would get the charge. Some charges used to take months to show up.

 

[cardiology]

Same thing happened to my HK AMEX card!!

Transaction: A$1900
Using xe.com mid rate: convert it to USD and then back to HK$

+ 2% surcharge by AMEX HK

--> They charged me HK$270 more!!

 

[paul4471]

Well an update on my situation.

I have received a written response from Amex. In nit they include the same line as the Singapore poster has in his T&C"s

"Unless a specific rate was required by law, the American Express treasury system has used conversion rates based on interbank rates (selected from
customary industry sources) from the business day prior to the processing date, increased by a single conversion commission of 2.5%. If Charges are converted by third parties prior to being submitted to us, any conversions have been made by those third parties at rates selected by them"

There is the usual volatile market etc statements and then a table showing that the rate used was $1AUD = 6.291699 ZAR.

Despite markis10's continual comment that they use whatever rate they like. Clearly they do not - they use a "customary industry source" for interbank rates. Surely now all we need to do is demand to know waht the customary industry sources are. This is clearly a defined list and must include those already mentioned:

IMF
Oanda.com
xe.com
etc

There is no way that any of these are going to come close to showing an interbank rate similar to the one above. I have commenced a dispute with the banking and financial services ombudsman today (although I won't hold my breath based on the 18mths they took to resolve my last dispute).

I'll also send a letter to the editor for a number of travel magazines such as Business Traveller, Conde Naste etc. Anyone got any other suggested mags that would maybe pick this story up?

paul4471

 

[markis10]

Well an update on my situation.

Despite markis10's continual comment that they use whatever rate they like. Clearly they do not - they use a "customary industry source" for interbank rates.

I think you have missed my point, I said that they could choose what rate they wanted in relation to the statement that they use "customary industry sources" (not source as you have quoted). With a forex spread of over 5-10% variance in some daily trades in recent history you would need to find out the following:

1. What are the sources they use and what market is it based on , for instance the largest currency market trade occurs in London which many of the sources you mentioned do not exclusively quote on, despite it being the bulk of world trades, or perhaps AMex use FxMArketplace as its US based, who knows?

2. What time was the quote taken, for instance when looking at the AUD to USD, the variance in 1 hour a few weeks ago was 4c, historical quotes are usually end of day quotes which can be significantly different to say noon rates at any given interbank location.

Amex do not say which source they use or what time of the day the quote is done for a reason, its called maximising profit!

 

[Evan]

The key issue is at the moment rates are so variable that they have lots of choice to get the best rate, when things are stable it all seems to work well and my variation in June 08 (last purchase in ZAR) was total cost around 3% which i assume was upto 0.5% in the market rates + Amex 2.5% charge.
E

 

[medhead]

I think you have missed my point, I said that they could choose what rate they wanted in relation to the statement that they use "customary industry sources" (not source as you have quoted). With a forex spread of over 5-10% variance in some daily trades in recent history you would need to find out the following:

1. What are the sources they use and what market is it based on , for instance the largest currency market trade occurs in London which many of the sources you mentioned do not exclusively quote on, despite it being the bulk of world trades, or perhaps AMex use FxMArketplace as its US based, who knows?

2. What time was the quote taken, for instance when looking at the AUD to USD, the variance in 1 hour a few weeks ago was 4c, historical quotes are usually end of day quotes which can be significantly different to say noon rates at any given interbank location.

Amex do not say which source they use or what time of the day the quote is done for a reason, its called maximising profit!

+1

But I would add they AMEX state they will use the highest rate. So they look at all the trades on a day from all the customary industry sources, or from governments or from whatever other sources the T&C mention, and then they take the highest of those exchange rates.