In 2010, Congress amended the Electronic Funds Transfer Act (EFTA) by creating “a comprehensive system of consumer protections for money sent by U.S. consumers to individuals and businesses in foreign countries.” In 2013, the CFPB issued the Remittance Transfer Rule to implement the EFTA’s new requirements and updated its EFTA exam procedures to incorporate the new rule. While the CFPB identified potential Remittance Rule Violations in several supervisory highlights (see Winter 2016 Supervisory Highlights, Summer 2017 Supervisory Highlights, and Winter 2019 Supervisory Highlights), it had not taken any Remittance Transfer Rule enforcement actions until last month when it entered into a consent order with Maxitransfers Corporation.

The CFPB alleged that Maxitransfers, a provider of international remittance transfers located in Irving, Texas, engaged in an unfair, deceptive, or abusive act or practice (UDAAP) and violated the Remittance Transfer Rule. Specifically, the CFPB alleged the following:

  • Maxitransfers’ disclosures stated that Maxitransfers would not be responsible for errors made by payment agents, when in fact the Remittance Transfer Rule specifies that a remittance transfer provider is liable for the errors of its payment agents;
  • Maxitransfers failed to maintain appropriate policies and procedures regarding the Remittance Transfer Rule’s error resolution requirements;
  • Maxitransfers failed to appropriately investigate and respond to alleged errors;
  • Maxitransfers failed to use appropriate terminology in its remittance disclosures; and
  • Maxitransfers failed to treat its international bill-pay services as remittances.

The CFPB required Maxitransfers to pay a $500,000 civil money penalty and alter the practices that resulted in the alleged violations.

The CFPB had previously identified several of the practices that formed the basis of the consent order as problematic in prior supervisory highlights. Remittance service providers should take this opportunity to review the Remittance Transfer Rule, consent order and past supervisory highlights to ensure they are EFTA compliant.