Companies who transfer funds to other countries have a new rule to live by. The Consumer Financial Protection Bureau (CFPB) issued the final remittance rule on August 20, 2012 to implement another facet of the Dodd-Frank Act. The rule is directed to companies that send money abroad for consumers, as well as other organizations that work with or represent consumers who send money abroad, including agents, software providers, foreign banks and others involved in international fund transfers from the United States.
The remittance rule is scheduled to take effect on February 7, 2013.
REQUIRED DISCLOSURES: Under the remittance rule, transferors must generally disclose to the consumer the exchange rate, transfer fees, the amount that will be transferred, and the date the money will be available to the recipient. Certain information must be disclosed to the consumer both before and after payment, in English and certain other languages.
CANCELLATION OPTION: Consumers must be allowed 30 minutes after payment to cancel a remittance for any reason.
CONSUMER COMPLAINTS: If a consumer reports a problem with a transfer within 180 days, the transferor/provider must generally investigate the complaint and correct errors, if any. According to the CFPB, the transferor/provider will generally be held accountable for errors, including mistakes made by their agents.
The final rule adopts a safe harbor with respect to the phrase ‘‘normal course of business’’ in the definition of ‘‘remittance transfer provider,’’ which determines whether a person is covered by the rule.
Certain transfer recipient countries are designated as safe harbors according to a list published by the CFPB, which will permit the estimated disclosure of certain figures in lieu of disclosure of exact amounts where the laws of the recipient country do not permit determination of the exact amounts.
It is not hard to predict the contraction of this market due to the new remittance rule, if for no other reasons than higher compliance costs and liability exposure for providers. When consumers have fewer providers to choose from, the basic economic law of supply and demand will drive up the cost of sending money home for many consumers who were perfectly happy with the way things were.
If you are a business that may be subject to the CFPB’s remittance rule, consult with an attorney experienced in commercial and consumer lending, finance, and litigation. The attorneys at Glass & Goldberg provide high quality, cost-effective legal services and advice for clients in all aspects of business litigation and transactional law. Call us at (818) 888-2220, email us at firstname.lastname@example.org, or visit us on the web at www.glassgoldberg.com to learn more about the firm and to sign up for future newsletters.