Brits are being misled by headline advertising for travel money which distorts consumers’ understanding of what they really get for their Pound, claims FairFX.com, the prepaid currency provider. Those opting for deals based on “0% commission” or “commission-free” could be paying over the odds as the true cost to consumers is not only the advertised commission rate, but also how many Euros, Dollars or other currencies they receive for each Pound exchanged, namely the exchange rate…
Brits are being misled by headline advertising for travel money which distorts consumers’ understanding of what they really get for their Pound, claims FairFX.com, the prepaid currency provider.
Those opting for deals based on “0% commission” or “commission-free” could be paying over the odds as the true cost to consumers is not only the advertised commission rate, but also how many Euros, Dollars or other currencies they receive for each Pound exchanged, namely the exchange rate.
The true cost to consumers can range from 3% to 5% at High Street providers, 7% to 12% at London airports, and up to as much as 15% at some regional airports.* The more captive the consumer, the higher the rate is.
Stephen Heath, Chief Executive of FairFX.com, said: “People may think they are paying “0% commission”, but that couldn’t be further from the truth. When it comes to holiday money, people are clearly being swayed by the misleading headline advertising tactics adopted by many providers.
“What’s more, people believe they are getting superior pricing because of “0% commission” advertising. But in reality the lack of transparent charging means consumers can’t see the true cost of the transaction, and they are getting a poor deal.”
The FairFX.com research shows most people do not understand what “0% commission” means. Nearly two in five travellers (37%) think it means providers don’t charge for a service and they are getting the money for free, and nearly a quarter (23%) assume companies don’t charge commission but they do sneak in charges elsewhere.
However, just 16% correctly understand that, despite advertising claims of “0% commission”, they would still be charged commission, fees and a poorer exchange rate to make a profit and do take this into account when making their purchase.
To compound the problem, most people (58%) said they look for a provider who charges “0% commission” when they get their holiday money.
Most Brits (57%) want providers to be honest about the commission they are being charged, and as long as companies are transparent they see little wrong with paying commission. A further 30% said they would prefer a separate fee or charge rather than pay commission at all.
Stephen added: “Quoting “0% commission” has become the normal advertising tag line for currency exchange providers, but most people don’t understand what it actually means. Providers are using this naivety to increase their bottom line.
“FairFX.com is calling on the Office of Fair Trading to enforce fair, industry-wide, transparent advertising for foreign currency. The OFT exists to protect consumer interests and ensure businesses are fair and competitive. But providers who advertise using “0% commission” or “commission free” are flouting these ideals, and eroding consumer choice and power. FairFX.com believes the OFT must intercede on consumers’ behalf.”
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
