Tuesday, February 7, 2012
New CFPB ruling tackles money transfer disclosures
The Consumer Financial Protection Bureau issued a final rule designed to increase consumer protections on international money transfers. The rule will require money transfer providers to disclose exchange rates and fees so that senders of money transfers will know precisely how much money is being sent, the CFPB said.
The new federal agency estimated that U.S. residents transfer tens of billions of dollars to recipients in foreign countries every year; undisclosed fees and exchange rates can accompany such transactions. "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," the agency said in a statement.
Under the new rule, money transfer providers must disclose fees, exchange rates and amounts when consumers first request to make transfers and again when payments are made. The CFPB said consumers will generally have 30 minutes after money transfers are made to cancel transactions.
The CFPB noted that prior to passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, international money transfers were generally not federally regulated. The agency said Dodd-Frank changed that by mandating an expansion of the scope of the Electronic Fund Transfer Act to provide protections for money transfer senders.
Dodd-Frank also transferred authority to implement the new requirements from the Federal Reserve Board to the CFPB. Money transfer providers have been given until January 2013 to implement the new rule.
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