Consumers who remit money to people in foreign countries will soon get more information about the exchange rate and fees associated with their transactions, thanks to a new rule adopted by the federal Consumer Financial Protection Bureau, or CFPB.
According to a CFPB statement, the new rule requires companies that handle international money transfers to disclose exactly how much money the recipient of the funds will receive, information that should help consumers understand the true cost of the transaction and comparison shop for money-transfer services.
The new rule also requires companies to investigate disputes and fix mistakes, the CFPB said.
CFPB Director Richard Cordray said in the statement people sending money to loved ones in another country shouldn't have to worry about hidden fees.
"With these new protections," Cordray said, "international money transfers will be more reliable. Consumers will know the costs ahead of time and be able to compare prices. Transfer providers will also be held accountable for errors that occur in the process."
That might sound like a big no-brainer, but in fact, these types of transactions have been subject to but little federal regulation, though states might have stricter laws.
Each year, consumers transfer tens of billions of dollars from the U.S. to foreign countries. These transactions generally have been off-limits to federal consumer regulations, but that lack of nationwide oversight changed due to the Dodd-Frank Wall Street Reform Act, which allowed for the new rules.
The final rule envisions a one-year implementation period and is subject to public comment, plus the possibility of "a few additional adjustments," the CFPB said. One such adjustment might limit the rule's effect on community banks, credit unions and other companies that don't normally process foreign-money transfers.
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