CFPB Adds Five Years to Remittance Fees Disclosure Rule
The CFPB proposed changes on Tuesday to its international money transfer rule.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, banks and credit unions are able to estimate third-party fees and exchange rates when providing remittance transfers to their accountholders until July 21, 2015.
If finalized, the CFPB’s proposal would extend the temporary exception by five years until July 21, 2020.
“Insured institutions can only use this exception when they cannot determine the exact amounts for reasons beyond their control,” the CFPB said.
Consumers transfer tens of billions of dollars from the United States to foreign countries every year. Under the CFPB rule, remittance transfer providers must disclose certain third-party fees and any exchange rate that will apply to the transfer. Consumers also have error resolution and cancellation rights.
“If the temporary exception expired in July 2015, some insured institutions have reported that current market conditions would make it impossible to know the exact fees and exchange rates associated with a minority of their remittance transfers,” the CFPB said in a press release.
“Without the exemption, these insured institutions report that they would be unable to send some transfers to certain parts of the world that they currently serve. The bureau believes that this exception is limited, and is not used for most remittances by insured institutions.”
The CFPB said problems arise from insured institutions sending open-network transfers, such as wire transfers.
“In an open network, the provider typically does not have control over, or a relationship with, all of the participants in the remittance transfer,” said the CFPB. “This lack of control can make it difficult to learn all of the potential fees and, in some cases, the exchange rate.”
Closed-network providers usually have more control since they send cash to recipients through agents, allowing them to disclose exact amounts to consumers.
The CFPB said an extension would give insured institutions that offer remittance services more time to develop reasonable ways to give consumers exact fees and exchange rates for all remittance disclosures.
“It is critical that we are able to protect consumers who send money abroad and that we preserve access to such services,” said CFPB Director Richard Cordray. “Today’s proposal would allow banks and credit unions to have more time to resolve certain implementation challenges while maintaining these important, new consumer protections.”