CFPB Requires Money Transfer Providers to Disclose Fees to Consumers
On January 20, the Consumer Financial Protection Bureau (CFPB) adopted a final rule regarding the disclosures that US consumers must receive when they transfer money to foreign countries. The rule generally requires that before a consumer makes an international transfer, companies offering remittance services in the regular course of business must disclose all associated fees, including the exchange rate, and the amount of money to be delivered to the recipient. In addition, after the transaction is completed, companies must tell the consumer which date the funds will arrive, and provide a receipt or proof of payment which contains the same information that appeared in the initial disclosure.
The new rule also gives consumers 30 minutes (sometimes more) to cancel a transaction, in which case consumers are entitled to a refund.
The rule applies not only to companies whose principal business is money transfer, but also to banks, thrifts, and credit unions which regularly offer money transfer services. The CFPB has issued a request for public comment on several aspects of the rule, including a proposal that an entity that makes no more than 25 remittance transfers in the prior year not be subject to the rule. Comments will be due 60 days after the request for public comment is published in the Federal Register.
The passage of the Dodd-Frank Act gave the CFPB authority to issue rules governing money transfer companies, debt collectors, payday lenders, and a host of other non-depository financial institutions that had previously been subject to more limited federal regulation. One can expect that the CFPB, with its recently appointed head, Richard Cordray, will continue to issue rules that cover these types of companies.