Consumers who send money electronically to foreign countries will receive some added protections for these transactions due to a new rule by the federal Consumer Financial Protection Bureau, or CFPB.
These transfers, known as "remittances," are used to send money to friends, family members and others who are outside of the U.S. A foreign wire transfer would be an example.
Consumers send billions of dollars out of the country each year, and until now, federal consumer protection rules haven't applied to most of those transfers, according to a CFPB summary.
The new rules will require that consumers be given a disclosure before they pay for a remittance transfer. The disclosure must state the currency exchange rate, any fees and the amount of money that will be delivered to the recipient. A receipt or proof of payment that repeats the information in the first disclosure and tells the consumer when the money will arrive also must be provided, the CFPB stated.
Disclosures must be provided in English though companies may offer disclosures in other languages as well.
Consumers must be allowed 30 minutes, or sometimes longer, to cancel a transfer and get their money back. Reports of problems must be investigated and some errors can trigger a full refund if the funds aren't remitted as promised.
The rules apply to all remittance transfers that are more than $15, made by a consumer in the U.S., and sent to a person or company in a foreign country.
The rules apply to most companies that offer remittance transfers, including banks, thrifts, credit unions and money transmittal companies. The rules will take effect Feb. 7, 2013, allowing these institutions time to prepare for the changes.
The National Consumer Law Center, or NCLC, an advocacy group for low-income people, applauded the consumer agency for what it called the "substantial protections" of the new rule.
Margot Saunders, an attorney for the NCLC, says in a statement that the disclosures and other requirements will "protect millions of consumers sending money overseas to family and friends."
The rules are "simple, easy to comply with and an essential tool for remittance senders to be able to understand the actual terms of the transaction," the NCLC says.
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