The Consumer Financial Protection Bureau issued a report to the President and congressional committees regarding remittance transfers and remittance exchange rates. The report covers transparency and disclosure to consumers of exchange rates used in remittance standards, and examines the potential for using remittance histories to enhance consumers' credit scores. The report was required by Section 1073(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Remittance transfers are electronic funds transfers from senders in the United States to recipients in foreign countries. Each year, U.S. consumers send billions of dollars to family members and others through remittance transfers.
The report articulates four recommendations:
- Disclosures to consumers about remittance transfers should be designed, tested, and used to maximize consumer comprehension;
- Exchange rate information should be communicated in a manner that facilitates consumers' comparisons of remittance transfer offerings;
- Disclosures about exchange rates should be adaptable to the growing variety of channels that consumers use to initiate remittance transfers; and
- When feasible, information about exchange rates should be coupled with an indication or estimate of the combined effects of fees and the exchange rate.
The Dodd-Frank Act established new remittance disclosure requirements, including the exchange rate used, the amount of currency that will be received abroad by the recipient, and other information. On May 23, 2011, the Federal Reserve Board published a proposed rule amending its Regulation E (Electronic Funds Transfer) to implement these changes. Responsibility for rulemaking under the Electronic Funds Transfer Act transferred to the Bureau today. The comment period expires tomorrow (July 22, 2011), and review of received comments and issuance of the final rule will be the Bureau's responsibility.