The Consumer Financial Protection Bureau is issuing rules to protect consumers who send money electronically to foreign countries. These transactions are called “remittance transfers.” The new rules take effect in January 2013.
Background
Consumers send billions of dollars in remittance transfers each year. Up to now, Federal consumer protection rules have not applied to most of these transfers. The Dodd-Frank Wall Street Reform and Consumer Protection Act changes that by requiring the Bureau to issue rules on remittance transfers.
Disclosures
The rules require companies to give a disclosure to a consumer before the consumer pays for a remittance transfer. The disclosure must list:
•The exchange rate,
•Fees, and
•The amount of money to be delivered.
Companies must also provide a receipt or proof of payment that repeats the information in the first disclosure. The receipt must also tell consumers the date when the money will arrive.
Companies must provide the disclosures in English. Sometimes companies must also provide the disclosures in other languages.
Other protections
The rules also require that:
•Consumers get 30 minutes (and sometimes more) to cancel a transfer. Consumers can get their money back if they cancel.
•Companies must investigate if a consumer reports a problem with a transfer. For certain errors, consumers can get a refund or transfer without charge the money that did not arrive as promised.
•Companies that provide remittance transfers are responsible for mistakes made by certain people who work for them.
Coverage
The rules apply to remittance transfers if they are:
•More than $15,
•Made by a consumer in the United States, and
•Sent to a person or company in a foreign country.
This includes many types of transfers, including wire transfers.
The rules apply to most companies that offer remittance transfers, including:
•Banks,
•Thrifts,
•Credit unions, and
•Money transmitters.
