CFPB Issues Consent Order Against Money Transfer Company over CFPA Violations

Last month the CFPB filed a Consent Order against a national secured money transfer company that primarily serves incarcerated individuals, resolving allegations that the company unlawfully interfered with inmates’ ability to access their own funds.

According to the Bureau, the transfer service would regularly engage in conduct that violated the Consumer Financial Protection Act (CFPA).  All of the money in an inmate’s account would be blocked if a person who contributed to the account disputed making the contribution.  The dispute would result in a reversal of the transaction, referred to as a chargeback.  Before unblocking the account, the transfer service required the inmate to pay both the amount of the chargeback as well as an additional fee.  In addition, after periods of inactivity, the transfer service would often empty unified accounts, which are accounts where family and friends could deposit money in a single place that could be used to pay for online messaging and video visits, without first notifying the inmates or others who funded the inmates’ accounts.

The transfer service was ordered to pay $1 million in civil penalties in addition to $2 million to those consumers whose accounts were emptied after a period of inactivity.  Further, the transfer service must return all of the money it emptied from the unified accounts.  The transfer service must also implement practices that prohibit blocking consumer accounts and disclose money transfer fee schedules to consumers ahead of charging such fees.