CFPB announces civil money penalty against nonbank, alleges EFTA and CFPA violations

Federal Issues Fintech CFPB CFPA EFTA Nonbank Unfair Enforcement Consumer Protection

On October 17, the CFPB announced an enforcement action against a nonbank international money transfer provider for alleged deceptive practices and illegal consumer waivers. According to the consent order, the company facilitated remittance transfers through its app that required consumers to sign a “remittance services agreement,” which included a clause protecting the company from liability for negligence over $1,000. The Bureau alleged that such waiver violated the Electronic Fund Transfer Act (EFTA) and its implementing Regulation E, including Subpart B, known as the Remittance Transfer Rule, by (i) requiring consumers sign an improper limited liability clause to waive their rights; (ii) failing to provide contact and cancellation information in disclosures, and other required terms; (iii) failing to provide a timely receipt when payment is made for a transfer; (iv) failing to develop and maintain required policies and procedures for error resolution; (v) failing to investigate and determine whether an error occurred, possibly preventing consumers from receiving refunds or other remedies they were entitled to; and (vi) failing to accurately disclose exchange rates and the date of fund availability. The CFPB further alleged that the company’s representations regarding the speed (“instantly” or “within seconds”) and cost (“with no fees”) of its remittance transfers to consumers were inaccurate and constituted violations of CFPA. The order requires the company to pay a $1.5 million civil money penalty and provide an additional $1.5 in consumer redress. The company must also take measures to ensure future compliance.