WASHINGTON — The Consumer Financial Protection Bureau (CFPB) has issued a new circular warning remittance transfer providers that “false advertising” about the cost or speed of sending a remittance transfer can violate federal law.
In making its announcement, the CFPB said companies in the marketplace are charging junk fees on international money transfers and making false claims about the speed of transfers. The circular highlights several marketing practices relating to sending international money transfers that may violate the Consumer Financial Protection Act’s (CFPA) prohibition on deceptive acts or practices, the Bureau said.
Tens of Billions Sent
The CFPB noted consumers in the United States send tens of billions of dollars in international remittances every year, often sent by immigrants to family and friends living abroad or to Americans living temporarily abroad, such as students. It further reminded it administers and enforces the Remittance Rule under the Electronic Funds Transfer Act, and also enforces the Consumer Financial Protection Act.
“Remittance providers may be liable under the CFPA for deceptive marketing practices regardless of whether the provider is in compliance with the disclosure requirements of the Remittance Rule, the CFPB said.
Specific Complaints
It said its new circular specifically addresses the following practices by remittance providers, including digital wallet providers that offer remittance services, that consumers have complained to the CFPB about and that the CFPB has observed in its market monitoring:
- Falsely marketing “no fee” or “free” services. “Providers can engage in deceptive acts by marketing remittance transfers as ‘no fee,’ when in fact the remittance transfer provider charges consumers fees to send the remittance transfer. Providers may also engage in deceptive practices by marketing remittance transfers as ‘free,’ if they are not in fact free.
“With respect to digital wallets or other similar products, it can be deceptive to market a transfer as ‘free’ if the provider imposes costs to convert funds into a different currency or withdraw funds from the product,” the CFPB continued. “It may also be deceptive to market international money transfers as ‘free’ if the provider is imposing costs on consumers through the exchange rate spread.”
- Burying promotional conditions in fine print. Providers may violate the law by advertising promotional pricing 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.
- Deceptively advertising how long transfers will take. “Remittance transfer providers may violate the CFPA’s prohibition on deceptive acts or practices by marketing remittance transfers as being delivered within a certain time frame, when transfers may actually take longer to reach recipients,” the CFPB said. “Recipients rely on remittance transfers for day-to-day expenses or for time-sensitive emergencies.”
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