CFPB Issues Reality Check on Deceptive Ads to Transfer Providers and Digital Wallets

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  • The CFPB has issued a new circular warning remittance transfer providers—including “digital wallets”—that deceptive advertising about the cost or speed of sending a remittance transfer can violate the Consumer Financial Protection Act, even if the provider is otherwise in compliance with the Remittance Rule under the Electronic Funds Transfer Act.
  • The CFPB warns that, among other things, it may be deceptive to 1) falsely market “no fee” services when, in fact, the provider charges a fee; 2) misrepresent remittance transfers as “free” if they are not free, including if a digital wallet product imposes costs to convert currencies or withdraw funds, or if costs are incurred through the exchange rate for international transfers; 3) deceptively advertise how long transfers will take; or 4) advertise promotional pricing for remittance transfers without clarifying limited or temporary terms, even if disclosed in fine print or later in the transaction.
  • This circular aligns with recent CFPB enforcement actions, including the October 2023 consent order issued against Chime Inc., d/b/a Sendwave, wherein the company was found to have made misleading statements in advertisements about the speed and cost of its services. Sendwave was ordered to pay a $1.5 million penalty to the CFPB, provide approximately $1.5 million in consumer redress, and change its advertising practices, among other things.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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