WASHINGTON D.C. โ Today, the Consumer Financial Protection Bureau (CFPB) issued a new circular warning remittance transfer providers that misleading advertising about the cost or speed of sending a remittance transfer may violate federal law. Marketplace companies charge junk fees for international money transfers and make false claims about the speed of transfers. The circular highlights several marketing practices related to sending international money transfers that may violate the Consumer Financial Protection Act's (CFPA) prohibition on deceptive acts or practices. This ban is enforced by the CFPB, states, and other regulators. The circular's guidance applies to both traditional international money transfer providers and โdigital walletsโ that offer the ability to send money internationally from the United States.
"Consumers should not pay junk fees for international money transfers that are advertised as free," said CFPB Director Rohit Chopra. "The CFPB will continue to work with law enforcement to ensure that companies do not illegally charge families with inflated fees or exchange rates through false or misleading claims."
Consumers in the United States send tens of billions of dollars in international remittances each year, often sent by immigrants to family and friends living abroad or to Americans temporarily living abroad, such as students. The CFPB administers and enforces the Remittance Rule under the Electronic Funds Transfer Act, the first and only federal regulation that provides disclosures and other important consumer protections for persons sending international remittances from the United States. The CFPB also enforces the Consumer Financial Protection Act, which prohibits unfair, deceptive, or abusive acts and practices throughout the consumer financing arena. Remittance providers may be liable under the CFPA for deceptive marketing practices, regardless of whether the provider complies with the disclosure requirements of the Remittance Rule.
Specifically, today's memo addresses the following practices of remittance providers, including digital wallet providers that offer remittance services, about which consumers have complained to the CFPB and which the CFPB has observed in its market monitoring :
- Falsely marketing โfreeโ or โfreeโ services: Providers may commit deceptive acts by promoting remittance transfers as โfree of charge,โ when in reality the remittance transfer provider charges fees to consumers for sending the remittance transfer. Providers can also engage in deceptive practices by promoting remittance transfers as โfreeโ when in fact they are not. With respect to digital wallets or other similar products, it can be misleading to advertise a transfer as โfreeโ if the provider imposes costs to convert funds to a different currency or withdraw funds from the product. It can also be misleading to promote international money transfers as โfreeโ if the provider imposes costs on consumers through the exchange rate differential.
- Bury promotional conditions in fine print: Providers may violate the law by advertising promotional prices for remittance transfers without clarifying that the offer is only limited or temporary in scope, even if the offer is disclosed in fine print or later in the transaction.
- Misleading advertising about how long transfers will take: Remittance transfer providers may violate the CFPA's prohibition on deceptive acts or practices by advertising remittance transfers as delivered within a certain time frame, when in reality the transfers may take longer to reach recipients. Recipients depend on remittance transfers to cover everyday expenses or for urgent emergencies.
Today's memo is the latest part of the CFPB's ongoing work to protect senders of international money transfers. In October 2023, the CFPB issued a consent order against Chime (doing business as Sendwave), finding that the company made misleading claims in advertisements about the speed and cost of its services. The CFPB also took action against UniTeller Service for failing to refund customers after the company made money transfer errors. Monitoring by the CFPB also found that international money transfer providers made false and misleading statements about the speed of remittance transfers.
The memo is part of an ongoing effort by the CFPB to curb junk fees and spur competition in the consumer financial products market. The CFPB has proposed rules for ban certain NSF fees and close an overdraft loophole That costs consumers billions every year. Earlier this month, the CFPB finalized a rule to limit most credit card late payment fees from top providers at $8 per instance.
Read today's new circular on remittances.
Read more about the CFPB's guidance on money transfers.
Read more about the CFPB's work on junk fees.
Consumers can file complaints about remittances and other financial products and services by visiting the CFPB website or calling (855) 411-CFPB (2372).
Employees of companies who believe their company has violated federal consumer financial laws are encouraged to submit information about what they know. whistleblower@cfpb.gov.
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information visit www.consumerfinance.gov.
