Banning Deceptive Claims of 'Free' Money Transfers

Consumer Financial Protection Bureau calls for end to deceptive claims

The Consumer Financial Protection Bureau (CFPB) is taking action to end deceptive practices in the international money transfer business.

In new guidance, the CFPB makes clear that claims of "free" transfers accompanied by junk fees violate the law.

“Consumers should not be paying junk fees on international money transfers that are advertised as free,” said CFPB Director Rohit Chopra. “The CFPB will continue to work with law enforcement to ensure companies don't illegally burden families with fees or inflated exchange rates using false or misleading claims.”

The CFPB's guidance spells out specific acts by international money transfer companies that constitute illegal activity. These include:

• Falsely marketing “no fee” or “free” services: Providers can engage in deceptive acts by marketing remittance transfers as “no fee,” when in fact the remittance transfer provider charges consumers fees to send the remittance transfer. Providers may also engage in deceptive practices by marketing remittance transfers as “free,” if they are not in fact free. With respect to digital wallets or other similar products, it can be deceptive to market a transfer as “free” if the provider imposes costs to convert funds into a different currency or withdraw funds from the product. It may also be deceptive to market international money transfers as “free” if the provider is imposing costs on consumers through the exchange rate spread.
• Deceptively advertising how long transfers will take: Remittance transfer providers may violate the CFPA’s prohibition on deceptive acts or practices by marketing remittance transfers as being delivered within a certain time frame, when transfers may actually take longer to reach recipients. Recipients rely on remittance transfers for day-to-day expenses or for time-sensitive emergencies.

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