By Nicole D. Prysby, J.D.
On June 19, 2019, several banking associations submitted a joint comment in response to the Consumer Financial Protection Bureau’s (CFPB) request for information (RFI) regarding its planned assessment of rules pertaining to consumer remittance transfers under the Electronic Fund Transfer Act (the Remittance Rule). The comment letter was submitted by the American Bankers Association, The Clearing House, the Consumer Bankers Association, and the Bankers Association for Finance and Trade.
As previously reported, banking associations expressed provisional support for the CFPB’s plan to reassess the current rules on consumer remittance transfers, and offered recommendations for consideration in May 2017. The associations’ latest comment letter highlights "the aspects of the Rule that are of greatest concern to the Associations and their member institutions."
The associations made the following specific comments about the Remittance Rule:
- Modify the rule to exclude transfers in excess of a certain amount, such as $1,000. The rule is intended to protect small-value payments sent to family members in other countries, and consumers who send high-dollar transfers do not need the special protections of the rule. The average remittance transfer is in the $200-$300 range, and it is these lower-dollar transfers that should be protected under the rule.
- Preserve the ability of banks to provide estimates of third-party fees. The CFPB has already established an exception to the rule’s disclosure provisions to allow banks to provide estimates of third-party fees when obtaining accurate data as to the fee amounts is not feasible. The exception will sunset in 2020 but the CFPB should make it permanent, at least for transfers sent through open networks to low-volume countries in which a provider is unable to identify precise amounts. If the exception expires, a number of banks have indicated that they would not be able to provide services in certain countries, because many of the correspondent banks in those countries cannot guarantee fees. The CFPB should also retain and expand the list of safe-harbor countries for which the provision of exchange rate estimates (rather than actuals) would be permitted, where the local practices of those countries do not permit the determination of actual costs.
- Modify the rule disclosure requirements. Providers should have alternative disclosure delivery options for consumers desiring greater flexibility in how they receive disclosures. Consumers who send routine remittance transfers may desire disclosures in writing, rather than being required to listen to an oral disclosure. Being able to provide disclosures in writing would also benefit consumers who are traveling. Alternative delivery channels should be at the option of the consumer. In addition, when a consumer is making multiple concurrent transfers, there is no need for the sender to have to listen to duplicate disclosures during a single telephone session. Disclosure requirements for preauthorized transfers should be simplified to encourage more providers to offer preauthorized transfer products.
- Modify the rule’s error resolution rights. The associations suggested limiting error resolution to refund (rather than resend) when the error results from sender error, the amount is less than $15, or the error has no impact on the amount of funds actually received. This would reduce the expense incurred when there are multiple resend requests and the provider reasonably believes the resend attempts will fail.
- Modify the rule’s resolution procedures. The associations recommended that the CFPB support a statutory amendment to the Dodd-Frank Act to shorten the length of time during which a sender must assert an error, from 180 days to 60 days. In addition, providers should be permitted to work with recipient banks to correct inaccurate or incomplete transfer instructions without triggering the rule’s resolution requirements. For example, by allowing the provider to correct a name mismatch, without having to treat the amendment as a new transfer requiring new disclosures.
Companies: American Bankers Association; Bankers Association for Finance and Trade; Consumer Bankers Association; The Clearing House
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