The Consumer Financial Protection Bureau (CFPB) announced on Tuesday, August 27, 2019 a consent order entered into with Maxitransfers Corp., a Texas-based money transmitter, following its investigation of Maxitransfers’ compliance with the Remittance Rule’s regulations concerning transmission error-resolution policies and consumer disclosures. The Remittance Rule was promulgated pursuant to The Dodd Frank Act and implements requirements of the Electronic Funds Transfer Act (EFTA). The CFPB found that Maxitransfers, which assists consumers in the US to remit money to Central and South America destinations, had violated the Remittance Rule by failing to have the required error-resolution policies and procedures in place and using non-standard language in its consumer disclosures. The worst of Maxitransfers’ failures was advising consumers it was not liable for any loss of funds, even though it actually is liable under the applicable law and regulations. The CFPB concluded that not only was this conduct in violation of the Remittance Rule but it was also an unfair and deceptive practice because the erroneous statements could affect consumers’ decisions on whether and how to exercise their rights under EFTA and the Remittance Rule.

Under the consent order Maxitransfers is required to pay a $500,000 civil penalty, and make numerous compliance upgrades and changes to its consumer disclosures. This was the CFPB’s first action with respect to the Remittance Rule, which primarily protects consumers who have ties to Central and Latin America and remit funds to their families back in their home countries. The investigation and settlement is also noteworthy given that it comes as the CFPB is apparently in the early stages of considering potential changes to the Remittance Rule, which is meant to be the framework for consumer protection in the international electronic money transfers, market – a multibillion dollar industry that is increasingly operated primarily by non-bank storefront businesses and online fintech companies, who are now successfully competing with traditional banks and credit unions. The Remittance Rule is meant to provide protections to consumers on, among other issues, fees, exchange rates and the actual amount of the remittance that gets to the foreign recipient. Changes that have been forecast are the broadening of a safe harbor for small remittance providers and exemption altogether for small banks, in light of some industry pushback on the asserted complexity and costs of compliance.