On October 4, 2022, the Consumer Financial Protection Bureau (CFPB) entered into a consent order with Choice Money, a New York nonbank remittance transfer provider involving violations of the Remittance Transfer Rule (“Remittance Rule”), Subpart B of Regulation E, 12 C.F.R. §§ 1005.30 to 1005.36, and the Consumer Financial Protection Act.

The CFPB alleged that Choice Money failed to comply with disclosure requirements for the Pre-Payment disclosure and the Receipt disclosure set out in the Remittance Rule. The Pre-Payment disclosure must be provided to the sender when the sender requests the remittance transfer, but prior to payment for the transfer and the Receipt disclosure must be provided to the sender when payment is made for the remittance transfer. Section 1005.31(e). A Combined Disclosure may be provided instead of the two separate disclosures and must be provided when the sender requests the transfer but prior to the payment. Choice Money used the Pre-Payment disclosure and Receipt.

• Section 1005.31(f) of the Remittance Rule requires transfer providers to send “accurate” disclosures, receipts, and combined disclosures to a sender when the sender pays for the transfer. Section 1005.31(b)(2)(ii) of the Remittance Rule requires transfer providers to disclose the date when funds will be available using the term “Date Available” or a substantially similar term. Choice Money allegedly failed to accurately disclose the date funds would be available to recipients and frequently used the same date as the date the transfer was requested and stated that funds may be available sooner (which was impossible).
• Section 1005.31(b)(1)(vi) and (b(2) (i) of the Remittance Rule requires the pre-payment disclosure and receipt to include the exchange rate used by the transfer provider. Choice Money reportedly disclosed an inaccurate exchange rate of 0.00 and no currency designation in its prepayment disclosures on its website.
• As stated above, Section 1005.31(f) of the Remittance Rule requires transfer providers to send “accurate disclosures, receipts, and combined disclosures to a sender when the sender pays for the transfer. Section 1005.31(b)(1)(i) and (b)(2) (i) of the Remittance Rule requires transfer providers to include any fees imposed on the pre-payment disclosures and receipts using the term “Transfer Fees” or a substantially similar term. Choice Money allegedly did not calculate the fee amount correctly in the disclosures and receipts and used the term “Service,” which is not a term substantially similar to Transfer Fees. In some cases, they applied discounts, which should have been deducted from the transfer fee amount. In other cases, they charged additional fees such as handling and credit card surcharge fees that should have been added to the transfer fee amount.
• Section 1005.31(b)(1)(iii) of the Remittance Rule requires pre-payment disclosures to disclose the total amount of the transaction in the currency in which the transfer is funded using the term “Total” or a substantially similar term. Choice Money allegedly used the term “Charged,” which is not a term substantially similar to Total.
• Section 1005.31(b)(1)(iv) of the Remittance Rule requires prepayment disclosures to include the exchange rate used by the transfer provider using the term “Exchange Rate” or a substantially similar term. Choice Money allegedly used the term “Rate,” which is not a term substantially similar to Exchange Rate.
• Section 1005.31(b)(1)(vi) of the Remittance Rule requires transfer providers to disclose to sender any covered third-party fees using the term “Other Fees” or a substantially similar term. Choice Money allegedly used the term “Cmm,” which is not a term substantially similar to Other Fees.
• Section 1005.31(c)(3) of the Remittance Rule requires transfer providers to adequately disclose key terms in at least 8 point font. Choice Money allegedly used a smaller font size.
• Section 1005.31(c)(2)(ii) of the Remittance Rule requires transfer providers to refund any fees imposed when the transfer provider fails to make funds available by the “Date Available” indicated on the receipt. Choice Money allegedly failed to refund fees during error resolutions as required under the Remittance Rule when funds were not made available by the “Date Available.”
• Section 1005.31(g)(1) of the Remittance Rule requires that disclosures be made in English and the foreign language primarily used by the transfer provider to advertise the transactions. Choice Money allegedly only made disclosures in one language—Spanish.
• Section 1005.31(a)(2) of the Remittance Rule requires transfer providers to comply with the E-SIGN Act. Choice allegedly failed to comply with E-SIGN Act requirements for obtaining consents its online platforms.
• Section 1005.33(g)(1) and (g)(2) of the Remittance Rule requires written policies and procedures for error resolution and the retention of evidence of compliance for at least 2 years. Choice Money allegedly failed to develop and maintain required policies and procedures for error resolution and to retain evidence demonstrating that it complied with error resolution requirements.

Additionally, Choice Money allegedly included an improper waiver of consumer rights at the point of sale in violation of Section 16931 of the EFTA that provides” [n]o writing or other agreement between a consumer and any other person may contain any provision which constitutes a waiver of any right conferred or cause of action created by this subchapter.”

The consent order requires Choice Money to come into compliance with the Remittance Rule and to pay a civil money penalty of $950,000.

As we previously reported, remittance transfers were included in the CFPB’s Spring 2002 and Fall 2021 Supervisory Highlights

This is the CFPB’s fifth Remittance Rule Consent Order since August 2019. The other Consent Orders were entered into with:

Envios de Valores La Nacional Corp.

Sigue CorporationTrans-Fast Remittance LLC.

Maxitransfers Corporation

In April 2022, the CFPB and NY Attorney General also sued MoneyGram for alleged Remittance Transfer Rule violations.

We strongly urge any company involved in the remittance transfer business to take a close look at whether its disclosures, policies and procedures are in full compliance with the CFPB’ Remittance Rule. We have helped several of our clients undergo this review.

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