A foreign exchange firm that won customers by slamming banks for overcharging customers is accused of basing the claims on misleading data.
TransferWise has taken the foreign exchange market by storm by rubbishing rivals but failed to explain how customers can save money with their service despite relying on the same infrastructure as the banks to send money around the world.
Despite this rumbling row within the industry, TransferWise has helped customers with more than £3 billion of money transfers.
Many are expats who rely on the firm for transmitting money from pensions and savings overseas.
The company was forced to pull their British web site for a quick redesign after the Advertising Standards Authority (ASA) upheld a complaint arguing that moneysaving claims were misleading and could not be verified.
The web site is back online.
Claims were not true savings
The main issue was a calculator on the web page.
Customers could enter the amount to transfer and see an instant quote listing the fee, exchange rate and ‘money saved’.
A new home page claims banks charge up to 5% in hidden costs when sending money overseas.
Inquiries by the ASA found the charges were calculated from the results of mystery shopper exercises for exchanging £1,000, £5,000 and £10,000 in six currencies that handled most of the transactions from the UK.
The sticking point for the ASA was an absolute claim that customers would save an exact amount which was not correct.
“Because consumers would not achieve a saving of exactly the amount shown, we considered that the claim “You’re saving £xx” had not been substantiated and we concluded that it was misleading,” said the ASA ruling.
The report also noted that not all banks were visited by mystery shoppers, so claims that all banks had been surveyed, were misleading.
All the complaints were upheld.
The ASA ordered TransferWise not to run the advertising again and not to make comparative savings claims against competitors unless the figures could be substantiated with verifiable evidence.
Meanwhile, The Financial Times has also run an article about TransferWise’s US operation and the company’s relationship with regulators in Texas and New Hampshire.