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

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) issued a new circular warning remittance transfer providers that false advertising about the cost or speed of sending a remittance transfer can violate federal law. Companies in the marketplace are charging junk fees on international money transfers and making false claims about the speed of transfers. The 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. 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.

“Consumers should not be paying junk fees on international money transfers that are advertised as free,” said CFPB Director Rohit Chopra. “The CFPB will continue to work with law enforcement to ensure companies don't illegally burden families with fees or inflated exchange rates using false or misleading claims.”

Consumers in the United States send tens of billions of dollars in international remittances every year, often sent by immigrants to family and friends living abroad or to Americans living temporarily abroad, such as students. The CFPB administers and enforces the Remittance Rule under the Electronic Funds Transfer Act, the first and only federal regulation that provides disclosures and other important consumer protections for people who send international remittances from the United States. The CFPB also enforces the Consumer Financial Protection Act, which prohibits unfair, deceptive or abusive acts and practices across consumer finance. Remittance providers may be liable under the CFPA for deceptive marketing practices regardless of whether the provider is in compliance with the disclosure requirements of the Remittance Rule.

Specifically, today’s circular addresses the following practices by remittance providers, including digital wallet providers that offer remittance services, that consumers have complained to the CFPB about and that the CFPB has observed in its market monitoring:

• Falsely marketing “no fee” or “free” services: Providers can engage 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. Providers may also engage 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, 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. It may also be deceptive to market international money transfers as “free” if the provider is imposing costs on consumers through the exchange rate spread.
• Burying promotional conditions in fine print: Providers may violate the law by advertising promotional pricing for remittance transfers without 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: Remittance transfer providers may violate the CFPA’s prohibition on deceptive acts or practices 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.

Today’s circular is the latest in the CFPB’s continuing work to protect senders of international money transfers. In October 2023, the CFPB issued a consent order against Chime (doing business as Sendwave), finding the company made misleading statements in advertisements about the speed and cost of its services. The CFPB also took action against Servicio UniTeller for failing to refund customers after the company made money transfer errors. Supervision conducted by the CFPB also found that providers of international money transfers made false and misleading representations about the speed of remittance transfers.

The circular is part of a continued effort by the CFPB to rein in junk fees and spur competition in the consumer financial product marketplace. The CFPB has proposed rules to prohibit certain NSF fees and close an overdraft loophole that costs consumers billions each year. Earlier this month, the CFPB finalized a rule to limit most credit card late fees from major providers to $8 per instance.

Read today’s new circular on remittances.

Read more about the CFPB’s guidance on money transfers.

Read more about the CFPB’s work on junk fees.

Consumers can submit complaints about remittances, and about other financial products and services, by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees of companies who they believe their company has violated federal consumer financial laws are encouraged to send information about what they know to whistleblower@cfpb.gov.