The Consumer Financial Protection Bureau yesterday issued guidance warning remittance transfer providers that falsely advertising the speed or cost of sending money can violate federal law, and that these provisions don’t just apply to the traditional providers of international money transfers, but to digital wallets that offer the capability to send money from the United States.
Some companies may market the speed at which transfers can be made available to the recipients while also deceptively advertising their services as no fee or free, according to the CFPB. This type of false advertising can fall within the parameters of the Consumer Financial Protection Act’s prohibition against deceptive acts or practices, the CFPB warned.
- Among the acts that may be considered to be deceptive are marketing a transfer as free if a cost is imposed to convert funds into a different currency or withdraw funds from the product. Free should mean free, the CFPB said. Companies that also try to impose fees based on the exchange rates it offers consumers and the rate is is paying to actually exchange money could also be considered deceptive, according to the Bureau. As well, companies that offer promotional pricing but do not inform consumers that the advertised fee or exchange rate is only a limited scope or temporary offer could also be considered to be deceptive and disingenuous.
- It is also deceptive to market that remittance transfers can be made within a certain timeframe, which the transfers actually take longer to be made available to recipients. The CFPB pointed to its enforcement action against Chime as evidence of how serious it takes these issues.
