Remittance Transfer Provider to Pay $950,000 to CFPB for Disclosure Violations

The CFPB recently entered into a consent order with a nonbank remittance transfer provider.  Following an investigation into the provider’s remittance transfer services, the CFPB found that the provider had violated various disclosure requirements set out in the Electronic Fund Transfer Act (EFTA) and its implementing Regulation E, amongst other violations.  As part of the settlement, the provider will pay $950,000 in civil money penalties.

Under Subpart B of Regulation E, also known as the Remittance Transfer Rule, providers are required to disclose to the sender and recipient of a transfer the date the funds will be available based on their respective locations.  To comply with these requirements, a provider may disclose the latest date on which the funds will be available.  The CFPB found that in some instances the provider failed to disclose the accurate date, and, instead, used the date that the transfer was initiated. 

The Remittance Transfer Rule also requires providers to disclose the exchange rate used by the provider for the remittance transfer, and to disclose any transfer fees at the time that a sender requests to initiate a remittance transfer and prior to the sender making any payments in connection with such transfer.  The CFPB found that the provider had disclosed inaccurate exchange rates of 0.00 for certain foreign currencies on its website.  The CFPB also found that the provider had failed to disclose accurate information about its transfer fees in its pre-payment disclosures and receipts.  For instance, the provider failed to accurately disclose discounts deducted from its transfer fees, and, instead, listed those discounts as separate items. 

In addition, under the Remittance Transfer Rule, providers are required to use specific terms, or substantially similar ones, when referring to particular parts of a transaction.  As examples, providers are required to use “Transfer Fees,” or a substantially similar term, when referring to fees charged in connection with a remittance transfer, and “Total,” or a substantially similar term, when referring to the total amount of the transaction.  The CFPB found that the provider’s use of “Service,” “Servicio,” and “Cmm” were not substantially similar to “Transfer Fees,” and the provider’s use of “Charged” or “Cargado” were not substantially similar to “Total.”

Finally, under the EFTA, providers are prohibited from including language that attempts to waive consumer rights in their disclosures.  The CFPB found that the provider’s language in its disclosures disclaiming responsibilities for delays and failures to effect payment was improper.

As part of the settlement, the provider will have to submit for CFPB-approval a comprehensive compliance plan that addresses the violations identified by the CFPB.  The provider neither admitted nor denied the CFPB’s findings.