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CFPB Warns Remittance Transfer Providers About Making False Claims

The Consumer Financial Protection Bureau (CFPB) has issued a circular warning remittance transfer providers about making false claims regarding the cost and speed of international money transfers.

False advertising of that sort can violate federal law, the agency said in a Wednesday (March 27) press release. This caution applies to both traditional providers of international money transfers and to digital wallets that offer that capability.

“Consumers should not be paying junk fees on international money transfers that are advertised as free,” CFPB Director Rohit Chopra said in the release. “The CFPB will continue to work with law enforcement to ensure companies don’t illegally burden families with fees or inflated exchange rates using false or misleading claims.”

One practice that consumers have complained to the CFPB about is falsely marketing services as “no fee” or “free” when in fact consumers are charged a fee, according to the release. It can be deceptive to make those claims if the provider imposes a cost to convert funds into a different currency or withdraw funds from the product.

Burying promotional conditions in fine print is another practice about which the CFPB warned remittance transfer providers. Advertising promotional pricing without clarifying that it is only limited or temporary in scope may be a violation of the law, even if the conditions are disclosed in fine print or later in the transaction, the release said.

The CFPB also received complaints about deceptive advertising regarding how long it takes to complete a transfer, per the release. This advertising may violate laws about deceptive acts or practices if it says remittance transfers will be delivered within a certain time frame, when they actually take longer.

In October 2023, the CFPB took action against Chime Inc., the operator of the Sendwave mobile app, for deceiving customers about the speed and cost of remittance transfers as well as illegally forcing consumers to waive their legal rights, failing to provide required disclosures and receipts, and neglecting to properly investigate consumer disputes and errors.

Chime Inc. is not connected to the California-based FinTech Chime Financial.

The CFPB ordered Chime Inc. to refund affected consumers nearly $1.5 million in fees and pay a $1.5 million penalty into the CFPB’s victims relief fund.