On January 30, 2025, the CFPB ordered Wise, an international remittance company, to pay almost $2.5 million in connection with allegations of illegal activities, including advertising inaccurate fees and failing to properly disclose exchange rates and other costs.

Pursuant to the consent order, Wise must pay approximately $450,000 in redress to harmed consumers and pay a $2.025 million civil penalty to the CFPB. The consent order was finalized prior Treasury Secretary Scott Bessent becoming Acting Director of the Consumer Financial Protection Bureau on January 31, 2025.

Wise allows consumers to receive, send and store remittances through a mobile app, prepaid accounts and debit cards. The CFPB said that it found that Wise misled consumers in the U.S. about its ATM fees and failed to properly disclose other fees. In addition, when people sent money that did not arrive on time, Wise failed to timely refund the remittance fees in accordance with the regulatory timelines. The CFPB alleged that the Wise’s actions resulted in harm to hundreds of thousands of consumers.

Wise PLC is a publicly traded global electronic money services provider that does business in the U.S. through Wise US. Wise US is a nonbank remittance transfer provider headquartered in New York and incorporated in Delaware. Wise does not have any physical storefronts in the U.S.; it relies on a mobile app, prepaid cards and debit cards. Wise maintains U.S. bank accounts, which allows it to process transfers for U.S. customers by transferring funds from the United States to foreign countries and vice versa. It also facilitates transfers that occur entirely outside the U.S. The prepaid card allows customers to store and send money in multiple currencies. A debit card product allows customers to spend money stored on the prepaid card.

The CFPB alleged that Wise specifically:

  • Violation of Sections 1031 and 1036 of the Consumer Financial Protection Act (CFPA). The CFPA prohibits a covered person from engaging in any unfair, deceptive or abusive act or practice in connection with a consumer financial product or service. The CFPB alleged that Wise sent multiple emails and blogs to its customers worldwide announcing lower ATM fees and other perks. While Wise led customers in the U.S. to believe the perks applied to them, when few, if any, of the U.S.-based customers received the perks. The CFPB also found that the violations of Prepaid Rule and Remittance Rule under EFTA/Regulation E were also violations of the CFPA.
  • Violations of the Electronic Funds Transfer Act (EFTA)/Regulation E’s Prepaid Rule.. The “Prepaid Rule” is the CFPB’s consumer protections for consumer prepaid accounts found in Section 1005.18 of Regulation E. The CFPB said that Wise allegedly made the following disclosure errors by failing to:
    • require consumer to view disclosure prior to opening a prepaid account,
    • accurately disclose fees for maintaining a Euro balance,
    • disclose accurate fees to consumers who funded prepaid accounts using a credit card through Apple Pay or Google Pay,
    • disclose required contact infromation on the prepaid account long form, and
    • provide consumers with a 21 day advance notice of a change in terms notice to ATM withdrawal fees.
  • Violations of the EFTA/Regulation E’s Remittance Rule. The “Remittance Rule” is the CFPB’s consumer protections for consumers who send remittance transfers found in subpart B of Regulation E. The CFPB said that Wise allegedly made the following disclosure errors by failing to:
    • provide certain foreign language disclosures to senders of remittance transfers,
    • properly disclose exchange rates, failing to use specified or substantially similar terms,
    • provide a receipt when a sender initiated payment, failing to use prescribed terms or substantially similar terms on receipts, failing to provide senders with disclosures related to error resolution and cancelations,
    • disclose Wise’s website on the receipts for transfers,
    • investigate notice of errors related to fund availability dates,
    • timely determine whether an error occurred, requiring that senders provide the recipient’s bank statement prior to investigating errors,
    • include a notice of remedies available for correcting errors,
    • timely correct errors with the appropriate remedy, failing to refund fees when funds were not available to the recipient by the date of availability,
    • note sender’s right to request error investigation documents,
    • retain records of error resolutions investigations for two years, and
    • develop and maintain polices and procedure to ensure compliance with the Remittance Rule.

Companies that open prepaid accounts and send remittance transfer may want to review their practices in light of these alleged violations.

As we have previously blogged here and here, the CFPB has taken prior enforcement action against remittance providers. Remittance transfers were also addressed in the CFPB’s Supervisory Highlights “Junk Fees” Special Edition to address the failure of remittance transfer providers to appropriately disclose fees or failing to refund fees, in certain circumstances, because of an error and CFPB’s Supervisory Highlights Summer 2023 Edition to address the failure of remittance transfer providers to develop and maintain policies and procedures designed to ensure compliance.

Last September, the CFPB proposed an amendment to the Remittance Transfer Rule to clarify that consumers should first contact their remittance company for issues specific to their money transfer to resolve issues more quickly.  The proposal would reduce the number of inquiries. Earlier in 2024, the CFPB also issued a circular on deceptive practices in connection with marketing remittance transfers.