Does Xoom assume fraud risk for credit-card-based transfers, or do credit-card companies bear that risk—and is this why card transfers cost more?

Xoom will do the regular fraud checks on the credit card when a transaction is taking place (AVS, IP match, velocity checks, etc.).

But for the transaction itself, Xoom will treat the transaction as a Cash Advance this means the transaction is non-reversible. You would not be able to contest this transaction for a reversal.

The merchant discount rate applicable on such transactions are higher, but Xoom passes this to the Remitter and they will have to pay what ever the charge is levied by the credit card company. In some instances, the charges are high (because of the fact, that cash advance is treated differently from regular transactions and thus charged higher).

So if a person sending the remittance via Xoom, decides to commit fraud (once the payment has been received in the beneficiary country) and then decides to challenge the transaction on their credit card and ask for a reversal, they will not be able to do it, since the transaction was treated as a cash advance.