Remittance service providers would need to update their disclosure statements under a narrowly tailored proposed amendment which aims to resolve issues more efficiently and save consumers time.
On September 20, 2024, the Consumer Financial Protection Bureau (CFPB) proposed a rule amendment to disclosure requirements under the Electronic Fund Transfer Act (the Act) and Regulation E (the Act’s implementing regulation) for certain international money transfers, or remittances (the Proposal). The Proposal seeks to provide consumers clearer information about the types of inquiries that may be better handled by their remittance company before contacting the CFPB or the relevant state regulator.
The Remittance Rule
The Act provides a basic framework for rights, protections, liabilities, and responsibilities of consumers and providers in electronic fund transfer systems and remittance transfers. Under the Act and the Remittance Rule of subpart B of Regulation E, remittance companies must provide senders with a receipt at the time of payment showing certain information, including:
- a statement about the rights of the sender regarding the resolution of errors and cancellation;
- the contact information of the remittance transfer provider;
- a statement that the sender can contact the CFPB or the state agency that licenses or charters the remittance transfer provider with respect to the remittance transfer “for questions or complaints about the remittance transfer provider”; and
- contact information for both the CFPB and relevant state agency.
The Proposal
According to CFPB data, approximately 35% of consumer calls regarding remittance issues “are more appropriately directed to the remittance transfer provider in the first instance,” as they “can often only be answered by the remittance transfer provider because they are customer inquiries related to a particular transfer for which the CFPB lacks knowledge.”
The Proposal therefore seeks to ensure that consumers sending a remittance transfer are informed about the types of inquiries that are best directed to the CFPB and the state agency.
Specifically, the Proposal would amend the disclosure requirements under the Remittance Rule (and corresponding changes to model forms) to clarify that the remittance sender can contact the CFPB or state licensing agency “if the sender has unresolved problems with the remittance transfer or complaints about the remittance transfer provider.”
The CFPB estimates that the Proposal could save consumers approximately 3,060 hours annually in calls to the CFPB’s toll-free number seeking answers that the CFPB is not able to provide.
Regarding market participant impact, the CFPB estimates that of the 9,280 depository institutions in the US, 483 would be covered by the Proposal and would need to update their statements on relevant disclosures.
Conclusion
The Proposal is open to public comment until November 4, 2024. The CFPB is seeking comment on whether the Proposal would provide helpful information to remittance senders and what, if any, impact these proposed changes may have on consumers, remittance transfer providers, and state licensing agencies.
If adopted, the Proposal would take effect 60 days after publication in the Federal Register with respect to new disclosures made on or after that date.
Latham & Watkins will continue to monitor developments in this area.
