Bureau circular reminds: remittances based on false advertising of “no fee,” “free” services violate federal law

Remittance transfer providers that issue false advertising about the cost or speed of sending a remittance transfer can violate federal law, the federal consumer financial protection agency reminded in a circular issued Wednesday.

The Consumer Financial Protection Bureau (CFPB) said it issued the circular as “part of a continued effort” by the agency “to rein in junk fees and spur competition in the consumer financial product marketplace.”

According to the agency, companies in the marketplace are charging junk fees on international money transfers and making false claims about the speed of transfers. CFPB said its 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.

“This prohibition is enforced by the CFPB, states, and other regulators,” the bureau said. “Guidance in the circular applies both to traditional providers of international money transfers and to ‘digital wallets’ that offer the capability to send money internationally from the United States.”

Key practices highlighted by the agency that remittance providers take and that are the subject of consumer complaints include:

  • Falsely marketing “no fee” or “free” services, by engaging 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, and engaging 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, CFPB said 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.
  • Burying promotional conditions in fine print, by not 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 by marketing remittance transfers as being delivered within a certain time frame, when transfers may actually take longer to reach recipients. Recipients rely on remittance transfers for day-to-day expenses or for time-sensitive emergencies, the bureau said.

CFPB Takes Action to Halt False Claims of ‘Free’ International Money Transfers