Exchange places may face new regulations

The Finance Ministry is currently handling a proposal for better oversight

As all tourists quickly find out, the Czech Republic is not in the eurozone, and it can be hard to find Czech crowns before coming here. Exchange offices have become a constant source of complaint from tourists, ranking with dishonest taxi drivers and restaurants that overcharge. Changes to the law governing exchanges are now being discussed.

There have been calls from the public for reform of exchange offices because despite the existing laws exchange office operators continue to find ways to give bad rates. Janek Rubeš, who is known on Youtube as the Honest Guide, has called attention to several spots that in particular give bad rates. He has even called for banning exchange booths from the airport completely, and instead encouraging people to use the airport stores, which all give better rates.

Czech National Bank (ČNB) spokesman Marek Zeman addressed the exchange office issue in an interview for news server Aktualne.cz. Since 2013, the law requires full disclosure about the transaction. The money changer is supposed to tell the client the full amount they will receive including all fees and charges in writing in Czech and English. Once the client signs the agreement, it is binding. Marek pointed out the responsibility is on the client to understand the information.

Changes to the relevant law are now pending. The ČNB gave its proposals to the Ministries of Finance and Regional Development, as well as the state agency CzechTourism. The Finance Ministry is now leading negotiations on the amendment.

Once idea in the draft is that clients would have up to two hours to cancel the deal and get their money back. Many people realize a few minutes after changing money that something wasn't quite right, but currently there is no recourse once the person leaves the exchange booth.

The proposal also calls for clearer information. Often, according to Marek, irrelevant information for deals most tourists don't need is prominently displayed, while the actual exchange rate is harder to find. Some exchange offices display the current official bank rate prominently with a cryptic note saying it is not the rate they offer. Tourists can be confused by this, for example. This idea of clear information is already in the current law, but the wording makes it hard to enforce, Marek said. The current law also does not have a cap for fees and surcharges.

Some people are calling for higher penalties for violating the law, but the penalties are often not enforceable. Under the law, the penalties cannot be so high that they but the exchange office out of business.

Due to this, Marek says better prevention of unfavorable deals is a more important goal than stronger punishment. In the end, though, no law can fully replace the diligence of the clients.

He also said that the central bank has dozens of inspectors monitoring the operation of exchange offices, but these people are also responsible for overseeing other areas of finance.

Examples of exchange booths giving poor rates are not hard to find. Rubeš, the Honest Guide, in one of his more popular videos spent a day outside one exchange office at Old Town Square warning people (see video below). The owner threatened him with legal action but never showed up in person.

“We were there the whole day. The boss never showed up. To me he is a coward. There were two 20-year-old girls studying and trying to make some money [working in the stand]. I told them, 'Look girls, I am sorry I am going to be doing this, but I am trying to save people some money.' But the boss or the manager never showed up. I would love to hear his side of the story. And I am sure his side of the story would be interesting to hear. And he should stand up for what he is doing,” Rubeš told Prague.TV previously.

His video was widely covered international press but not by Czech media. “I was pretty sad that episode was covered by 20 different articles globally but not a single Czech publication. I want to bring the attention of the locals to it. If I bring the attention of tourists I can warn them, but they can't solve it. But if I get attention of Czech media to it I'll be more than happy, even if they don't mention me,” he said.

That seems to be changing, though, as Aktualne.cz has now run a series of articles exposing some of the tricks that exchange places use and also listed several of the places that were hit with the largest fines. One company was fined Kč 600,000 in 2016 for not specifying its commission rates properly. Another company was hit with a Kč 350,000 fine for in part having the commission rate displayed next to the floor and lacking a license for some credit card transactions. Fines were not limited to Prague. Offices in Brno, Karlovy Vary and other locations also faces sanctions.

The total amount of fines last year was Kč 3.4 million, with the average being Kč 80,000. One license was revoked.

Video on YouTube

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