WARNING: AMEX Exch Rate Errors

[paul4471]

Just a heads up that I am currently in dispute with Amex on a ZAR to AUD foreign currency transaction for a OW DONE4 RTW ticket purchased during the recent drop in the South African currency.

Amex have made an error of in excess of $350 in the exchange rate. Transaction was for 52140ZAR, converted by Amex on 1/11/08. They have charged $8494.29 inclusive of their $207 conversion fee.

The oanda.com interbank rate (supposedly the rates used by Amex and recnfimred by their CSA) shows the rate that day as $7912, adding the $207 this comes to $8119.

45 minutes on the phone and a wait of 1 week since commencing the disputed rate and I am told that it could take 6-8 weeks to correct this. Very frustrating and poor service given the rate son OANDA can be pulled up in about 10seconds.

Anyway - I'm sure it will be resolved but just a heads up to watch these transaction closely if you have or are thinking of booking airfares out of RSA.

 

[serfty]

Hmmm, XE - Credit Card Charges Calculator indicates that's 436.47 AUD ( 5.417% ) tacked on to 8,057.82 AUD.

 

[Danger]

I've had exactly the same happen to me today, also on a DONE4 out of South Africa. I've been overcharged $136 according to the IMF exchange rate on 4 November (the date of the transaction). The last advice I had from AMEX was the IMF rate is what they use for exchanges. Seven days to wait also.

(I typed a long and detailed response but the website went down as I submitted it.)

 

[KateMayo]

I've also been overcharged $500+ on a DONE4 purchased in ZAR with an AMEX card - I'll post more details shortly

 

[jingles]

The oanda.com interbank rate (supposedly the rates used by Amex and recnfimred by their CSA) shows the rate that day as $7912, adding the $207 this comes to $8119.

But amex dont use the spot rate.
They generally use $0.02 above the rate meaning they earn an easy profit

 

[KateMayo]

I purchased a DONE4 on 31.10.08. According to my statement this was the date of processing. I used a Westpac Earth Amex card.

The terms and conditions of this card state that the exchange rate used is the one prevailing on the date prior to processing – in this case, 30.10.08. Transaction fees amount to 1.5% for Amex plus 2% for Westpac, making a total of 3.5%.

Total purchase amount ZAR49778. Amex converted this to AUD8188.60.

According to xe.com, the conversion should have come to $7398.60 prior to transaction fees. Transaction fees would have pushed this up to $7657.55 – a whopping $531.05 less than the actual cost. The transaction fees (according to xe.com) have therefore amounted to 10.678% on top of the original price.

Westpac say they can do nothing about this as the exchange rate is set by Amex.

I have, as a consequence, written to Amex and await their reply.

I’m expecting words such as “volatile” and “fluctuating” to be banded around, but maybe that’s my cynical side.

My other major concern regarding this issue is that when using a credit card for overseas purchases one does not know the exchange rate that will be used and one therefore has to trust the issuer to use a rate that is fair. This has never been an issue in the past – but, then again, this has been my first overseas purchase using an Amex card.

We shall wait and see how Amex respond….

 

[paul4471]

I am really disturbed to find these responses and everyone with the same issue. Anecdotally I was told by the first Amex CS guy today that it looks like they will refund $394 to me but when he looked he could see that it has yet to be approved by the "forex section". Repeated requests to talk to that divison were denied. I want to hear from them what base rate they are using.

I've posted a link to this discussion onto the FT OW board as well for the folks over there to track it to.

I put lots of foreign currency transactions through AMEX as I'm sure many here do but to be honest the small ones (<$1000) I've never even bothered to cross check on. If I am being slugged 5% every time for these by Amex then it might be time to re-evaluate how we do foreign currency purchases in my business.

 

[Danger]

I for one am well and truly fed up with AMEX and I'm considering any legal recourse that might be available to me. I'm going to go back over my old statements and check the exchange rate that was used on other international transactions.

Almost as disturbing as their apparent thieving is that nobody knows how their exchange rates are calculated. Last week, when I first enquired about the rate they use, I was told they use Reuters and was referred to their website. On Friday, in my lengthy and somewhat heated dispute with an AMEX supervisor (who first told me the exchange rate was set by American Airlines and that they had nothing to do with it), I was told to contact AMEX's foreign exchange department in Sydney. I did this today and was told they only deal with selling currency, not the exchange rates used for transactions. So I phoned AMEX back and was this time told, by a different operator, that they use the conversion rate set by the ASX. I phoned the ASX and, guess what, they have absolutely nothing to do with currency or exchange rates. Again, back on the phone to AMEX who yet again give me different information, this time that they get their rates from the IMF. The operator referred me to their website and their exchange rate archives. This is how I ultimately determined that I'd been overcharged $136.

It really isn't good enough. Essentially, they can't tell how you're being charged. Yes, we all know they are infinite fluctuations in currencies every second of the day but surely the customer should know how the rate is derived. After all, they can't simply pluck it out of thin air! If it is $0.02 above the spot rate then what is the spot rate and where can the everyday consumer find that rate to ensure they're not being ripped off. Yet everyone seems to have a different idea as to how the rate is calculated, suggesting to me there's something dirty going on.

Incidentally, the AA service fee for the DONE4 booking (about 300 ZAR) was charged as a separate transaction on my AMEX. Because it was only a small amount I was only overcharged $0.81. However, because it was a small amount the disputes operator was able to reverse it then and there. In doing this she was essentially that the wrong rate had been used, a point I think might see as an admission of guilt or at least go a long way towards suggesting that fact.

 

[KateMayo]

I’ve just redone my calculations using the IMF rate as suggested by Danger as being the exchange rate Amex uses and have been overcharged an extra $42.40 - $573.45 in total.

 

[medhead]

Do these calculations here account for the AMEX process of converting to USD first and then to AUD? I'm not sure the transaction date really means anything concrete. Based on my visa card experience the transaction day is when you made the purcahse with a merchant. It can take a number of days for the transaction to be processed by the merchant. AMEX use the exchange rate on the billing day not the day that one makes a purchase. So the date on the statement may not be the day the currency was converted.

Given the wild currency swings recently, processing via USD and that IMO the transaction most likely billed on a different day. I'm not surprised by the differences quoted in relation to a single date exchange rate.


Pedantic note warning: is now redundant

 

[Danger]

In my case I first converted the amount to $US than into AUD. As the exchange from ZAR to USD to AUD takes place on the same day the resulting amount is the same, as though it had been converted straight from ZAR to AUD.

Also in my case the date of the transaction and the date of posting were both identical - November 4. In fact, the AUD amount was deducted from my card within an hour of it being processed in South Africa.

 

[paul4471]

Shouldn't matter really as OANDA spot (interbank) rates on 11/01/08 give:

52140 ZAR ---> 7912.73 AUD
or
52140 ZAR --> 5246.33 USD ---> 7912.73 AUD

Above is assuming of course that both conversion occurred on the same day. However for reference I did do the ZAR to USD on the 10/30/08 and the USD to AUD on 11/01/08 just to see the result and it actually comes out even better for me ($7755AUD) so AMEX are going to strugle with the double conversion argument.

Of course I guess there's the possibility they will say they get to charge the 2% conversion fee twice, in which case it will be the last ever non US$ foreign purchase I make on my AMEX.

Thanks for the pick up on the "<", have corrected it.

paul4471

 

[KateMayo]

In my case I first converted the amount to $US than into AUD. As the exchange from ZAR to USD to AUD takes place on the same day the resulting amount is the same, as though it had been converted straight from ZAR to AUD.

Also in my case the date of the transaction and the date of posting were both identical - November 4. In fact, the AUD amount was deducted from my card within an hour of it being processed in South Africa.

My experience was exactly the same as Danger's. The conversion I performed using the IMF rates of exchange were to USDs first and then to ZAR.

The amount was also processed very soon after the transaction occured - lowering my available balance by an amount that, interestingly, was closely consistent with the rate of exchange prevailing on the day (using xe.com, which was very similar to the IMF rate).

I have tried calculating the conversion using available figures all the way from the day before the transaction itself to five days after and whilst there were days when the rate of exchange was closer to Amex's calculated rate of exchange, there are none that are close.

 

[NM]

Given the wild currency swings recently, processing via USD and that IMO the transaction most likely billed on a different day. I'm not surprised by the differences quoted in relation to a single date exchange rate.

Given such conditions, I would expect a similar number of transactions to be in the customer's favour as in Amex's favour. I am yet to see any transaction on any credit card that calcs to an exchange rate that is lower (even minimally) than any published exchange rate of the day. Its always in the card provider's favour.

 

[medhead]

cool thanks everyone. Just wasn't sure if that could be a factor. obviously not. Also take NM's point about the law of averages.

I spent quiet a long time trying to find the T & C for AMEX on their website without luck. Ended up ringing them to suggest they post the full terms. Anyway, quizzed them about the conversions process and the person stated that they definitely do not charge the 2% conversion fee twice.

Very strange.

Good luck with it. Thanks for the warning.

 

[alemdohorizonte]

wow. thanks for this.
amex got me for 8.893% over the official zar exchange rate for my aone6 purchased on october 28. the amex agent i just spoke to confirmed it should only have been 2.5%. like everybody else, i have to wait for "an investigation."

this is very troubling to me. i have hundreds of foreign transactions so far this year which i always have assumed were correct and am now wondering how many of them american express has defrauded me on.

first the myreward fiasco and now this. i am losing faith in amex fast.

 

[alemdohorizonte]

supplementary to my last post, i went back and checked the exchange rate amex used for my previous aone6 i purchased in south africa (february 22). at that time they rate-jacked me with 4.2573% above the official exchange rate. while not as egregious as their most recent almost 9% rate-jack, it is still well above their stated 2.5%.

on the same bill was a computer that i purchased in the usa in us dollars. here they charged just over 3.6%.

now i feel like i need to go through my entire overseas charge history with amex and calculate the amount of money they have overcharged me.

anyone else spot check any of their other overseas charges from previous months?

 

[Evan]

I thought it was the stated 1.5% ?? i seem to remember Amex having a low charge... although maybe not great rates.
Earlier in the year my AONE5 there was almost 3%, still on almost 10k thats $300 ! so not insignificant.

MindPearl dont take Visa with the Plus logo on the back so my only choice was Amex (not to mention better for points)

My Singapore ones seem ok, actually doing spot checks on both Amex and my ANZ Visa i actually got better than mid market rates !!! so maybe there is times when you get a bit back from Amex transactions.

E

 

[one9]

This thread has brought up an interesting topic.

I believe it would be useful to many to make a list of what source each credit card issuer uses for the exchange rate and how where we can check the exchange rate so that we can make sure we were charged the correct amount.

Some people have mentioned xe.com, but this i not useful. We need to know the source that Amex/Citibank etc use so that we can check it to make sure the card issuer used the correct rate.

 

[Danger]

We need to know the source that Amex/Citibank etc use so that we can check it to make sure the card issuer used the correct rate.

I agree, but the problem I've found is every AMEX operator gives you a different answer. In my case I was told they use rates from Reuters, then I was told it was their office in Phoenix, then it was the ASX and then finally the IMF. I firmly believe that the consumer should have the right to know how the transaction is calculated and the fact that nobody at AMEX seems to know suggests to me they could very well be out to hide something.

now i feel like i need to go through my entire overseas charge history with amex and calculate the amount of money they have overcharged me.

This is definitely what I'll be doing. I've online ordered my old statements from the periods in which I've previously been overseas and I'm seriously considering having a chat to my solicitor about really getting stuck into this organisation.