On January 30, the CFPB issued a consent order against a fintech company that allows customers to send, receive and store remittances through a mobile app’s prepaid accounts and debit cards. The CFPB alleged the fintech violated the CFPA by engaging in deceptive marketing practices, including advertising inaccurate ATM fees and failing to disclose exchange rates properly and other related costs, which resulted in overcharging users $156,000 approximately. The consent order also stated the company failed to comply with numerous requirements imposed by Regulation E including: (i) not requiring consumers to view electronic disclosures prior to acquiring the account and instead allowed consumers to bypass reviewing the disclosures through a “check-box procedure”; (ii) failing to accurately disclose fees for consumers who held over 15,000 euros in their prepaid accounts; (iii) not identifying the different fees a consumer would incur when funding a prepaid account through digital payment services using a debit card versus a credit card; and (iv) failing to refund fees when funds were not available to the recipient by the date of availability.
According to the consent order, the company must commit to developing and implementing a comprehensive compliance plan to adhere to the EFTA, Regulation E, and related consumer protection laws. The company must also enhance its compliance management system, provide annual training for relevant staff, and establish monitoring and audit functions to promptly address any deficiencies. Furthermore, the company will be required to provide consumer redress, reserving or depositing $449,550.99, and submit a detailed redress plan for the Bureau’s review. In addition to these measures, the company is obligated to pay a civil money penalty of about $2 million.
