Many Prague exchange offices ignoring new consumer protection rules

Exchange offices still post VIP rates and refuse to cancel the transaction within three hours

Despite tough new laws, many exchange offices in Prague are continuing their old deceptive practices. The Czech National Bank (ČNB) has already fined several exchanges for violations, but this has not discouraged them.

New rules came into effect April 1. They were inspired in part by a series of YouTube videos exposing exchange offices made by online reporter Janek Rubeš, also know as the Honest Guide.

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Clients, for example, now have up to three hours to reverse a transaction if they determine it was unfavorable.

Another tactic that was banned but is still used is the special VIP rate list, which causes confusion with clients as the rates seldom apply to the transactions that people make. People exchanging money see a sign with what looks like a favorable rate, but in practice get much less money in return.

The difference between the regular rate and VIP rate for one euro can be as much as CZK 9 lower, and for changing 100 euros, a client can lose CZK 900, according to a followup report by Rubeš for Czech news server

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The Chivas Invest exchange office on 28. října street, near Wenceslas Square, was fined CZK 500,000 by the ČNB but continues to post a VIP rate, according to a recent report. They added that this was far from an isolated case. And while many exchange offices have different brand names, the deceptive signs are identical, the report added.

The right to cancel the transaction in three hours also is not being honored at many exchange outlets.

In order to dispute the transaction, the client needs a receipt with the time printed on it. In many cases, the offices have stopped giving receipts.

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A video report by Rubeš showed that many exchange offices would not honor the law on canceling the transaction unless a camera was present.

In theory, the ČNB could withdraw licenses from repeat offenders. Some exchange offices are getting around this by technically shifting their ownership to a new company after a violation.

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The law that came into effect April 1 states information on the right to cancel the transaction in three hours has to be printed on the receipt from the exchange office. The receipt also has to include the website of the Czech National Bank, which will provide information on customer rights.

In order to withdraw from the contract, the law sets a limit of 1,000 euros to avoid speculation on short-term rate changes. The Finance Ministry said this covers up to 95 percent of transactions.

If the transaction is done by a cash machine, customers will be able to withdraw from the transaction within three business days at any office of the company.

In addition to banning VIP rates, there is also a ban on payment of service fees.

The city and the state have been trying to address the situation with exchange offices for decades, but often the exchange offices find ways to work around the restrictions such as posting the actual rates below eye level, posting the reverse rates or including an expensive map in the transaction that the client did not ask for.

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