CFPB Issues Reality Check on Deceptive Ads to Transfer Providers and Digital Wallets

  • The CFPB has issued a new circular warning remittance transfer providers—including “digital wallets”—that deceptive advertising about the cost or speed of sending a remittance transfer can violate the Consumer Financial Protection Act, even if the provider is otherwise in compliance with the Remittance Rule under the Electronic Funds Transfer Act.
  • The CFPB warns that, among other things, it may be deceptive to 1) falsely market “no fee” services when, in fact, the provider charges a fee; 2) misrepresent remittance transfers as “free” if they are not free, including if a digital wallet product imposes costs to convert currencies or withdraw funds, or if costs are incurred through the exchange rate for international transfers; 3) deceptively advertise how long transfers will take; or 4) advertise promotional pricing for remittance transfers without clarifying limited or temporary terms, even if disclosed in fine print or later in the transaction.
  • This circular aligns with recent CFPB enforcement actions, including the October 2023 consent order issued against Chime Inc., d/b/a Sendwave, wherein the company was found to have made misleading statements in advertisements about the speed and cost of its services. Sendwave was ordered to pay a $1.5 million penalty to the CFPB, provide approximately $1.5 million in consumer redress, and change its advertising practices, among other things.