As a child of South Asian immigrants,
I recall my parents frequently sending money back to our family and
friends in India. Because so much depended on its receipt, my parents
were uneasy about the transaction until they knew the money was in the
right hands. Their unease was not unwarranted. My parents had no control
over how the money got there. When my parents used a service to send
money, they never fully understood the process, were charged numerous,
unexplained fees, and felt powerless if any errors were made. At times
they resorted to sending cash by mail, an option that was not especially
secure.
Unfortunately, other immigrant families and other consumers who must
send remittance transfers have had similar experiences, which is why
advocates have been calling for greater protections around these
transfers of money, or remittance transfers. Now, with direction from
Congress through the Dodd-Frank Act, the Consumer Financial Protection
Bureau (CFPB) has changed that. The CFPB adopted new rules that will go
into effect in February 2013. These rules will generally make the costs
of remittances clear and hold remittance transfer providers accountable
for certain errors.
Here’s how:
Better Disclosures: Under this rule, remittance transfer providers must
generally disclose the exchange rate, any fees related to the
remittance, the amount of money that will be delivered abroad, and the
date the money will be available. Certain disclosures must be provided
both before and after the consumer pays for a remittance transfer.
Consumers will generally receive these disclosures in English and
sometimes in other languages. The CFPB thinks the clarity provided by
these disclosures will help inform consumer decisions and instill
confidence.
Option
to Cancel: Typically, consumers will have at least 30 minutes after
payment to cancel a remittance. If they cancel within the 30 minute
window, they will get their money back, whether they make a mistake,
change their minds, or feel something isn’t right.
Correction of Errors: With this rule, remittance transfer providers will
generally be held accountable for errors. If a remittance sender reports
a problem with a transfer within 180 days, the provider must generally
investigate and correct errors. Companies that provide remittance
transfers may also be responsible for mistakes made by their agents. The
CFPB believes this will encourage remittance transfer providers to use
reliable agents and partners in the U.S. and abroad, helping to weed out
the bad actors.
As a lifelong advocate for immigrant communities, I am very proud that
the first final rulemaking adopted by the CFPB addresses this issue and
brings new protections to many consumers who, like my family, continue
to send money to family members, loved ones, and others abroad.
