U.S. banks and other domestic financial institutions that send international money transfers for consumers will soon be subject to new rules intended to ensure more disclosure and greater consumer protection. In line with those new rules, the federal Consumer Financial Protection Bureau has now published the procedures it will use to examine the companies that make these so-called remittance transfers, to ensure they comply with the rules.
In a statement, CFPB Director Richard Cordray said consumers need and deserve greater transparency and basic consumer protections when they transfer money internationally, and the new examination procedures will help ensure they get that from remittance providers.
Consumers send tens of billions of dollars from the U.S. to foreign countries each year, according to the CFPB. Before the Dodd-Frank Wall Street Reform and Consumer Protection Act, such money transfers generally weren't subject to federal consumer protection regulations. Now, they are.
In February 2012, the CFPB issued a final rule that outlined how companies must treat consumers who send money abroad. The rule was subsequently revised to address implementation challenges and will now become effective Oct. 28, the CFPB said.
The rule applies to banks, credit unions and other companies that offer international transfers to consumers. Companies that consistently handle 100 or fewer remittance transfers per year are exempt, as are all transfers of less than $15.
The new examination procedures will be used as a guide to ensure that the financial companies provide required disclosures, follow proper error resolution procedures and offer refund and cancellation rights to consumers. Examiners also will review companies' activities to discover potentially unfair, deceptive or abusive acts or practices. If appropriate, enforcement actions might be taken to address harm to consumers, the CFPB said.
The rules require that consumers be told about certain fees, the currency exchange rate and the amount the recipient will receive. Errors must be investigated and resolved, and the consumer has a right to be informed of the outcome of the investigation. Consumers also have the right to cancel most remittance transfers up to 30 minutes after they pay for them.
"Regulators will be looking to make sure that the provider refunds the consumer's money at no additional cost to the consumer within three business days if the consumer makes an appropriate request in time," the CFPB said.
Have you ever had trouble transferring money overseas?