Banking and Finance Law Daily CFPB settles with remittance transfer providers over Remittance Transfer Rule violations
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Tuesday, September 1, 2020

CFPB settles with remittance transfer providers over Remittance Transfer Rule violations

By Nicole D. Prysby, J.D.

The Bureau entered into settlements with remittance transfer providers, resolving allegations that the companies violated the Remittance Transfer Rule, EFTA, and the CFPA.

The Consumer Financial Protection Bureau settled claims with Trans-Fast Remittance LLC and Sigue Corporation and its subsidiaries, resolving allegations that the companies violated the Remittance Transfer Rule, Electronic Fund Transfer Act (EFTA), and Consumer Financial Protection Act (CFPA) prohibition against deceptive acts or practices. For example, said the Bureau, they failed to provide refunds required by the Remittance Transfer Rule and failed to implement policies and procedures to ensure compliance with consumer financial laws. Trans-Fast will pay a $1.6 million civil money penalty and Sigue and its subsidiaries will pay about $100,000 in consumer redress and a $300,000 civil money penalty.

On August 31, 2020, the Bureau announced that it entered into settlements with Trans-Fast Remittance LLC and Sigue Corporation and its subsidiaries. Trans-Fast, which until recently was a remittance transfer provider, is based in New York. Sigue and its subsidiaries provide consumers with international money-transfer services, including remittance-transfer services.

According to the stipulated consent order, Trans-Fast violated EFTA and the Remittance Transfer Rule by failing to adhere to error resolution requirements and properly respond to cancellation requests, failing to provide refunds the Remittance Transfer Rule requires, failing to maintain required policies and procedures, and failing to provide required disclosures. For example, Trans-Fast’s practice was not to refund fees to customers if a transfers was received, even if it was received after the date disclosed on the receipt. But the Remittance Rule requires fees to be refunded if a transfer occurred after the date disclosed, regardless of whether it was ultimately received. Trans-Fast also promised that it could provide "instant" transfers or transfers within minutes, and failed to do so.

The consent order against Trans-Fast requires it to pay a $1.6 million civil money penalty. If Trans-Fast resumes offering remittance transfers, the consent order requires it to adopt a compliance plan to ensure that its remittance transfer acts and practices comply with all applicable federal consumer financial laws and the consent order. The consent order also imposes recordkeeping and reporting obligations on Trans-Fast.

According to its stipulated consent order, the Bureau’s investigation found that Sigue and its subsidiaries failed to refund transaction fees when they did not make funds available by the disclosed date of availability, and they failed to inform consumers of the remedies available for remittance errors. When Sigue and its subsidiaries investigated remittance errors, they failed to report to consumers in writing the results of their investigations into transaction errors or consumers’ rights as required by the rule. Sigue and its subsidiaries also failed to develop and maintain adequate written policies and procedures designed to ensure compliance with certain Remittance Transfer Rule error-resolution requirements and failed to comply with several Remittance Transfer Rule disclosure requirements. For example, they failed to identify amounts, fees, and taxes associated with some transfers.

The consent order requires Sigue and its subsidiaries to pay about $100,000 in consumer redress and a $300,000 civil money penalty. They must also implement and maintain written policies and procedures designed to ensure compliance with the Remittance Transfer Rule and maintain a compliance-management system that is designed to ensure that their operations comply with the Remittance Transfer Rule, including conducting training and oversight of all agents, employees, and service providers, and not violating the Remittance Transfer Rule in the future.

Companies: Sigue Corporation; Trans-Fast Remittance LLC

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