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On October 17, the CFPB took action against a nonbank fintech company for allegedly deceiving consumers about the speed and cost of remittance transfers through its mobile app. The Bureau also alleges that the company illegally forced consumers to waive their legal rights, failed to provide consumers with legally required disclosures and receipts, and failed to properly investigate consumer disputes and errors. The CFPB is ordering the company to refund affected consumers nearly $1.5 million in fees and pay a $1.5 million penalty into the CFPB’s victims relief fund.

Through the mobile app, consumers were able to send money internationally, primarily to countries in Africa and Asia. Recipients received the remittance transfers by delivery to a mobile wallet, bank account, or in-person cash pick-up. The CFPB found that the company violated the CFPA’s prohibition on deceptive acts and practices by misrepresenting to consumers the speed and cost of its remittance transfers. Further, the CFPB found that the fintech company violated the Electronic Fund Transfer Act (EFTA) and the CFPB’s Remittance Transfer Rule by: 

  • Forcing consumers to waive their legal protections;
  • Making false promises about the speed and cost of remittance transfers;
  • Failing to provide required disclosures;
  • Failing to track, investigate, and resolve errors; and
  • Failing to provide receipts in a timely manner.

In an accompanying statement, CFPB Director Chopra stated that “[the company] put illegal fine print into their contracts and tricked people who were sending money to their family overseas. . . . [t]he CFPB is carefully watching companies launching mobile payment transfer apps seeking to gain an unfair advantage over their law-abiding competitors.”

Putting It Into Practice: Since the beginning of 2022, the CFPB has taken numerous actions against other remittance providers (see here, here, here, and here). The CFPB has also proposed a new rule that would require nonbank companies, including those providing remittance transfers, to submit their terms and conditions to the CFPB to be included in a public registry. Companies with mobile payment transfer apps should review these latest actions and be mindful of upcoming rulemaking that may impact how they interact with customers.