The Consumer Financial Protection Bureau, or CFPB, has adopted a rule that will increase protections for consumers who transfer money internationally. Under the new rule, remittance transfer providers will generally be required to disclose the exchange rate and all fees associated with a transfer so that consumers know exactly how much money will be received on the other end. The rule also requires remittance transfer providers to investigate disputes and remedy errors.
Consumers transfer tens of billions of dollars from the United States to foreign countries each year. According to the CFPB, these transactions can involve undisclosed fees and exchange rates that result in less money for the intended recipients. The CFPB believes those sending the money may not know how much the recipient will actually receive because the fees and exchange rates can be obscured in the transfer.
Prior to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, international money transfers were generally excluded from existing federal consumer protection regulations. To remedy this, the Dodd-Frank Act expanded the scope of the Electronic Fund Transfer Act to provide protections for senders of remittance transfers, and mandated that rules implementing certain provisions of the new protections be issued by January 21, 2012.
Under the Bureau’s rule, remittance transfer providers must disclose the fees, the exchange rate, and amount to be received by the recipient. Disclosures must generally be provided when the consumer first requests a transfer and again when payment is made. Consumers will generally have 30 minutes after payment is made to cancel a transaction.
Dodd-Frank transferred authority to implement the new requirements from the Federal Reserve Board to the CFPB in July 2011. The Federal Reserve Board issued a proposed rule in May 2011. The final rule provides for a one-year implementation period. In issuing the final rule, the CFPB considered the Federal Reserve Board’s proposed rule and comments that were received.
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