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Lessons from the CFPB’s First Remittance Transfer Rule Consent Order

By Lee Gilley & Dana C. Lumsden on September 20, 2019
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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.

Upcoming Webinar

WebinarIf you would like to learn more about the remittance transfer rules or the Maxitransfers consent order, we encourage you to join us for our “Remittance Transfer Rules: Lessons from the CFPB’s Recent Action Against Maxitransfers” Webinar, which is scheduled for Tuesday, September 24, 2019, from 11:30 a.m. to 12:30 p.m. CST. Webinar login information will be provided one day prior to the event. Register for the webinar today.

Photo of Lee Gilley Lee Gilley

Lee Gilley focuses on representing financial institutions and mortgage companies in a variety of litigation and compliance matters, including title insurance recovery cases, compliance with the National Mortgage Settlement, general regulatory compliance, and government investigations. View articles by Lee

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Photo of Dana C. Lumsden Dana C. Lumsden

Dana Lumsden practice focuses on business litigation, including intellectual property disputes, securities litigation, investigations and enforcement proceedings and the resolution of regulatory controversies concerning consumer financial services. His recent matters include the defense of financial services companies in consumer class action matters, the…

Dana Lumsden practice focuses on business litigation, including intellectual property disputes, securities litigation, investigations and enforcement proceedings and the resolution of regulatory controversies concerning consumer financial services. His recent matters include the defense of financial services companies in consumer class action matters, the resolution of multi-jurisdictional mortgage servicing disputes, as well as serving as lead counsel in response to investigations of the mortgage servicing industry brought by the New York Department of Financial Services. Dana is also the Managing Partner of Bradley’s Charlotte office.

Read more about Dana C. LumsdenEmail Dana's Linkedin Profile
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  • Posted in:
    Financial
  • Blog:
    Financial Services Perspectives
  • Organization:
    Bradley Arant Boult Cummings LLP
  • Article: View Original Source

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