The Consumer Financial Protection Bureau (CFPB) is now targeting international money transfers and “junk fees” that may be saddled upon users.
The CFPB issued a warning to firms that provide these services regarding allegations of false claims and misinformation about the cost of transfers and the time it takes to complete the transaction.
CFPB Director Rohit Chopra said consumers should not be paying junk fees on international money transfers.
“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 warning specifically mentions:
- Falsely marketing “no fee” or “free” services
- Burying promotional conditions in fine print
- Deceptively advertising how long transfers will take
Part of the challenge is that transfers and payments firms can use exchange rates to cloak hidden fees. There is no current standard as to an established spot rate which would address this issue. It is not clear how the CFPB would tackle this hurdle.
While many firms provide these services, a new legion of Fintechs is providing global money movement, with some aiming to be more transparent about the cost of the transfer. Additionally, digital assets, or stablecoins, may be one way to address the issue, as stablecoin transfers can be immediate and at a very low cost.
