On December 21, 2020, the CFPB issued its third consent order involving violations of Subpart B of Regulation E, 12 C.F.R. §§ 1005.30 to 1005.36, the Remittance Transfer Rule (“Remittance Rule”) in the last four months and fourth order since August 2019. This most recent consent order was issued against Envios de Valores La Nacional Corp. (“La Nacional”), a non-bank remittance provider that offers remittance transfers through a network of retail branches and agents to primarily Central American and South American countries. At the end of August 2020, the CFPB issued two separate consent orders against Sigue Corporation and Trans-Fast Remittance LLC for violations of the Remittance Rule. The CFPB’s first remittance transfer consent order in August 2019 was issued after six years of no enforcement related to the Remittance Rule.
In the consent order, the Bureau alleges that La Nacional:
- Failed to honor properly and timely received cancellation requests, issue refunds, and provide consumers their cancellation rights. Section 1005.34(a) of the Remittance Rule requires that remittance providers honor any oral or written request to cancel a remittance transfer that is received by the provider no later than 30 minutes after the sender (i.e., consumer) makes payment if the cancellation notice identifies the sender’s name and address or phone number and the funds have not yet been received by the designated recipient. If a cancellation notice is properly asserted, § 1005.34(b) requires remittance providers to refund (without additional cost to the sender) the total amount of funds provided in connection with the remittance transfer, inclusive of fees and taxes (as not prohibited by law), within three business days of receiving the cancellation notice.
The CFPB alleged that La Nacional failed to provide refunds except when the consumer cancelled the remittance transfer in-person at the originating branch or agent location. Additionally, La Nacional allegedly failed to provide consumers with a 30 minute cancellation window and failed to issue refunds when cancellation was properly asserted, but the originating branch or agent location closed less than 30 minutes after the transfer was initiated.
- Failed to maintain error resolution and recordkeeping policies and procedures. Section 1005.33(g) requires remittance transfer providers to develop and maintain written policies and procedures designed to ensure compliance with the Remittance Rule’s error resolution requirements. These policies and procedures must also include policies and procedures related to retention of error resolution records.
La Nacional’s policies and procedures reportedly did not reference the requirements for complying with the Remittance Rule’s error resolution provisions, describe how La Nacional employees and agents identify errors, or describe the types of records to be maintained or the length of the required retention period.
- Failed to investigate and make error determinations. Section 1005.33(c)(1) of the Remittance Rule requires remittance transfer providers to “investigate promptly and determine whether an error occurred within 90 days of receiving a notice of error . . . [and] report the results to the sender . . . .” To the extent an error is confirmed, the Remittance Rule sets forth procedures and remedies for resolving the error, such as refunds.
- Failed to provide written reports of error investigation findings if no error occurred or a different error than alleged by the consumer occurred. Section 1005.33(d) requires a remittance provider to give the consumer a written explanation of the error investigation findings with a statement that the consumer can request the documents the provider relied on in making its determination when the remittance provider determines that no error occurred or that the error is different than that alleged in the consumer’s error notice.
- Failed to refund transaction fees and taxes when funds were not made available to the designated recipient by the availability date on the receipt. Section 1005.33(c)(2)(ii) of the Remittance Rule requires a remittance transfer provider to refund transaction fees and taxes to a sender when the remittance provider fails to make the funds available to the designated recipient by the availability date on the receipt.
- Failed to treat international bill-pay services as remittance transfers. International bill-pay services can be remittance transfers covered by the Remittance Rule, and La Nacional’s reported failure to treat such services as remittance transfers led to the corporation’s alleged failure to provide consumers with the required disclosures and substantive rights set forth in the Remittance Rule.
- Failed to disclose the currency the remittance transfer is received in by the designated recipient on the required prepayment and receipt disclosures. Section 1005.31(b)(1)(vii) requires remittance transfer providers to disclose the currency the remittance is received in by the designated recipient on the prepayment disclosure while § 1005.31(b)(2)(i) requires the same currency disclosure on the receipt.
La Nacional reportedly used the phrase “National Currency” instead of the actual name of the currency or currency code (e.g., MXN) on the required disclosures.
- Failed to use the term “Transfer Fees” or a substantially similar term in some required prepayment disclosures and receipts. Sections 1005(b)(1)(ii) and 1005(b)(2)(i) of the Remittance Rule requires remittance transfer providers to disclose any fees imposed by the provider on the remittance transfer in the currency funding the remittance transfer using the term “Transfer Fees” or a “substantially similar term.”
La Nacional allegedly used the terms “Telex,” “Omission,” and “Handling” to describe the fees consumers were charged. The CFPB did not deem these terms “substantially similar” to “Transfer Fees.”
- Failed to disclose the date the remittance transfer would be available for pick-up by the designated recipient on the receipt. Section 1005.31(b)(2)(ii) requires that remittance transfer providers disclose the date that funds will be available to the designated recipient in the foreign country using the term “Date Available” or a “substantially similar term” on receipts.
The consent order requires La Nacional to: (1) pay a civil money penalty of $750,000; (2) comply with the Remittance Rule, including provisions related to cancellation and refund procedures, error resolution requirements, and prepayment disclosure and receipt requirements; (3) stop offering international bill-pay without treating the services as remittance transfers subject to the Remittance Rule; (4) implement written policies and procedures to ensure compliance with the Remittance Rule, particularly the error resolution provisions; and (5) maintain a compliance management system designed to ensure compliance with the Remittance Rule, including training and oversight of agents, employees, and service providers. The CFPB did not require La Nacional to provide consumer redress.