Currency Exchange Offices, also known as Money Exchange Offices or Kiosks, are sometimes known to short-change and scam tourists and travellers through hidden fees and unfair rates. These currency exchange services are strategically located in places of first arrival such as international airports and central stations of major tourist destinations or busy touristic areas and crossroads. They are usually well advertised, making it easy to spot, especially thanks to the boards that display the various exchange rates applied between the most used currencies and the local one.
Their game is to intercept anyone passing by who needs to purchase local currency. Ideally, they target foreigners who have just arrived and have no idea of the exchange rate compared to their currency.
Although, with their policies of hidden fees, they are able to trick even the most informed travellers if distracted.
The most annoying thing is that this type of tourist scam is not only tolerated but even legal in many countries, or at least not regulated like a banking system would be. In practice, it is based on the fact that, usually, licensed exchange offices can technically apply any exchange rate or service fees they want. In this logic, it would be up to the “customer” to choose the most convenient service among those available.
1) How It Works
As mentioned, their strategic location helps them intercept foreigners who need to buy local currency. They are usually very flashy with conspicuous and bright signs. This features, as well as what follows, depends a lot on the nation where you are and the notoriety or internationality of the owner of the stand or office.
Some might reverse the exchange rates on the screens (e.g., from USD / EUR to EUR / USD) to be more appealing to passers-by. Along with the buy rate (We Buy) and sell rate (We Sell) indications, they sometimes display pairs of exchange rates on the screens for the same coins side by side for comparison (the official one and another that should be the one applied) as if to underline the convenience of their services.
Some of them might have signs extolling some 0% fee policy to entice the tourist to enter.
When they promise that 0% fee policy or a too convenient rate, it is often at the condition of exchanging a ridiculous high amount of money with penalties or extra services to pay if you don’t. Or there’ll be very small asterisks, notes or conditions that “better explain the offer” and the fees applied.
Usually, the routine is exactly based on asterisks and small print. Potential targets see the convenient exchange rate and enters to change their money. Sometimes, before the end of the transaction, the Exchange Office might even show on screen the amount in local currency that you want to change WITHOUT having yet applied the fees.
Once the transaction is completed, you will receive a significantly less amount of money than expected. This will then be explained by the clerk and indicated on the receipt as a cost for their service.
2) What You Risk
Up to 19-28%, sometimes even more, of the amount exchanged might be gone in these extra fees or in the arbitrary exchange rate used.
3) How To Avoid It
Have at least an idea of the current rates. It will help you a lot against currency-based scams. You might search it on the internet from the source you prefer or use the links in the Extras And Thoughts – External Links below.
- Carefully read the terms and conditions of these services, including very small asterisks and marginal notes. And check twice the amounts before accepting the transaction.
- Ask how much you would receive for a number that makes you comfortable calculating a percentage or change rate with. e.g., “how much I’ll receive in exchange for 100 $ or €?”. Then do your math.
- You may find other exchange offices or, even better, institutional ones (such as banks and post offices) sometimes even by walking just a few steps away. Their rates may still be high but lower in fees.
- Fellow tourists and travellers, as well as Official Touristic Info Points, might point you to safer and more convenient exchanges offices, ATMs, or even better solutions, like the ones in the previous point.
- ATMs might offer better rates than an exchanging kiosk but beware of ATMs scams (like this one) and other foreign cards rip-offs (coming soon).
- Some credit card services may offer better exchange rates for electronic payments, sometimes even protect the purchases. Be careful though for possible scams targeting Credit and Debit Card Scams (here the link for the tag).
4) Extras And Thoughts
As with many other articles in this guide, this is not intended to be a condemnation of the activity of licensed exchange offices that provide a relatively useful service. What we are trying to do is warn about common unfair practices used by some companies and offices and advise you to choose operators, even among the same Exchange Offices, more fair and convenient.
In some guides and reports, we have found that even hotels that offer currency exchange services could use this practice. The How To Avoid It and the Extras And Thoughts sections above still apply.
Although these practices may be legal or borderline in many countries, in some areas of the world their way of advertising and attracting foreigners could be considered legally deceptive and fraudulent. In case of substantial loss of money due to this scam, if possible, to report the matter and seek guidance or consultation from your respective embassy or consulate office.
Other Scams Related to Currency Exchange
In this article, we have focused exclusively on Currency Exchange Offices’ fraudulent practices that are considered legal in many countries. However, we plan to expand the series with the tourist scams related to Currency Exchange Services and Vendors, both legal and not.
You’ll find them soon under the tag Currency Exchange Scams.
External Links
To quick check the curren exchange rate between two currencies you can try this link xe.com or this calculator.net.
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