UK-based Fintech Wise (LON: WISE) has been penalized by the Consumer Financial Protection Bureau (CFPB). Wise has been ordered to pay $2.5 million for claims of failing to provide disclosures to consumers. The $2.5 million is split between $450,000 in redress for impacted individuals and a $2.025 million civil penalty.
Wise is best known for its global payments and transfers service, which touts its transparency, speed, and low fees. The CFPB claims that Wise misled US customers about its ATM fees and failed to disclose other fees adequately.
Additionally, the CFPB states that when people sent money that did not arrive on time, Wise failed to refund the remittance fees in the timeframe required by law.
As well, the CFPB reports that Wise sent multiple emails and blogs to its customers claiming lower ATM fees, free withdrawals, and other customer perks.
Wise is said to have led customers in the US to believe these perks applied to them when they did not.
Other transgressions include failing to disclose accurate fees to consumers who funded prepaid accounts using a credit card through Apple Pay or Google Pay, failing to adequately disclose exchange rates, failing to refund fees when funds were not available to the recipient by the date of availability, and failing to make other required disclosures.
CFPB Director Rohit Chopra said that Wise gave itself an unfair advantage over competitors:
“New technology can help make money transfers cheaper and more convenient, but companies must be truthful and live up to longstanding law.”
While Wise is based in the US, the penalties target US operations. Wise is said to have 3 million customers in the US.
The CFPB notes that Wise offers US consumers several products:
- Send Money (remittance transfers through its mobile app)
- the Wise Account (a prepaid account product)
- Wise offers a debit card to spend money on a prepaid account
Wise maintains US bank accounts, which allows it to process transfers for US customers by transferring funds from the US to other countries. Wise also facilitates transfers by US customers that occur entirely outside the United States.
