The Federal Reserve has issued a proposed rule that would create new protections, including new disclosures, for consumers who send remittance transfers to recipients located in a foreign country. The proposed rule released on May 12 would implement Section 1073 of the Dodd-Frank Act, which added a new Section 919 to the Electronic Fund Transfer Act (“EFTA”) that requires remittance transfer providers, including banks, to provide senders of remittance transfers with certain disclosures. The proposed rule would amend the Federal Reserve’s Regulation E, which generally implements the EFTA, to require that a remittance transfer provider provide a written pre-payment disclosure to a sender containing information about the transfer, such as the exchange rate, applicable fees and taxes, and the amount to be received by the designated recipient. The rule would permit oral pre-payment disclosures if the transaction is conducted entirely by telephone. The remittance transfer provider also would be required to provide a written receipt when payment is made for the remittance transfer. The proposed rule includes a series of model forms that may be used to comply with the new disclosure requirements. Comments on the proposed rule are due by July 22, 2011. The Consumer Financial Protection Bureau will be responsible for completing the final rule, as it will take over rulemaking authority under the EFTA from the Federal Reserve on July 21, 2011.
Nutter Notes: The term “remittance transfer” refers to a transaction where a consumer sends funds to an individual located in another country, often the consumer’s country of origin, by wire transfer, an international automated clearing house transaction or other method. According to the Federal Reserve, traditional remittance transfers typically consist of consumer-to-consumer payments of low monetary value. In addition to the new disclosure requirements, the Dodd-Frank Act provides error resolution rights for senders of remittance transfers and directs the Federal Reserve to promulgate standards for resolving errors and rules concerning recordkeeping requirements, cancellation and refund policies. The error resolution procedures would be generally similar to those that apply to a financial institution with respect to errors involving electronic fund transfers under Regulation E. The proposal also provides remittance transfer senders certain cancellation and refund rights. The Dodd-Frank Act requires that the rules be finalized not later than January 21, 2012.