On October 4, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it had issued a consent order against a non-bank provider of a money transfer service for multiple violations of the Electronic Fund Transfer Act ( EFTA), 15 U.S.C. § 1693 and following., and its implementing regulation E, 12 CFR Part 1005, including that the company did not specifically disclose certain money transfer fees, exchange rates, or when the recipient would receive the funds. The CFPB alleged in the consent order that in addition to these violations, the company had deficient practices to allow consumers to dispute erroneous transactions and receive a refund. The consent order requires the company to pay a fine of nearly $1 million.
The CFPB action follows a 2020 review of the company, which led to an investigation into whether the company violated the funds transfer rule, 12 CFR § 1005.30 and following., which requires that certain information be provided to consumers who use ATMs or send funds electronically. According to the consent order, the CFPB found that the company violated the funds transfer rule in at least ten ways:
- He “disclosed inaccurate ‘date available’ information to some senders on the disclosures, stating a date that was not the last date funds would be available,” and his “point of sale receipts listed the date of availability as the same date as the transfer date. Consent Order ⁋⁋ 17-18.
- He “disclosed the exchange rates. . . which consistently showed an exchange rate of 0.00, which is inaccurate. ID. ⁋ 23.
- It “did not accurately characterize certain types of ‘transfer fees’ in pre-payment disclosures and receipts provided to senders”. ID. ⁋ 29.
- Its “English and Spanish point-of-sale prepayment disclosure templates” did not use the terms it was required to use when making required consumer disclosures, or terms that were substantially similar to the required terms. ID. ⁋⁋ 34, 36, 38, 40.
- His “Written Disclosures.” . . disclosed the required terms in a font size smaller than eight points. ID. ⁋ 45.
- He “failed to repeatedly refund charges when a shipper correctly submitted an error notice alleging an error in the availability date and [the company] determined that such an error has occurred. ID. ⁋ 50.
- In its “Point of Sale Receipts, and Disclosure and Prepayment Receipt website and mobile app, [the company] disclosed the exchange rate as a string of numbers with no currency designation or indication of the particular currency to or from which the disclosed rate was converted”, and therefore “did not clearly and conspicuously disclose exchange rate”. ID. ⁋⁋ 55-56.
- It “has not provided disclosures in English and in the foreign language used by the Sender to conduct a transaction or primarily used by [the company] to advertise” and “[i]n point-of-sale transactions that meet Spanish reporting requirements, [the company]Agents only provided the information in Spanish and not in the two required languages. » ID. ⁋⁋ 60-61.
- It “did not obtain consumer consent before providing receipts in electronic form on its mobile app and website platforms.” ID. ⁋ 65.
- It “did not have policies and procedures designed to ensure compliance with the specific document retention requirements of the remittance rule of § 1005.33(g)(2)”, nor did its “policies and procedures no longer take into account [several other] provisions of the discount rule. ID. ⁋⁋ 71-73.
In addition, the Consent Order alleges that the company violated Regulation E by failing to maintain evidence demonstrating its compliance with the error resolution requirements of the Funds Transfer Rule, and that it violated EFTA by including an improper waiver of consumer rights in its point-of-sale disclosures. ID. ⁋⁋ 75-83.
This is the CFPB’s fourth enforcement action in the Chopra era focused on alleged EFTA violations, and the second action in the same period that focuses specifically on the transfer of funds rule. .