The Consumer Financial Protection Bureau (CFPB) recently issued proposed changes to the rule it originally proposed on January 20, 2011, governing certain electronic money transfers by consumers that was required by the Dodd-Frank Act. See http://www.gpo.gov/fdsys/pkg/FR-2011-05-23/pdf/2011-12019.pdf for the original proposed rule. The proposed rule is the first federally mandated disclosure, error resolution and cancelation rule imposed on “remittance transfer providers,” which include both financial institutions, and non-depository entities such as money transmitters which previously were regulated only by state law. Providers that handle 100 or fewer remittances per year would be exempt from the requirements of the rule under a previous revision to the original proposed rule. Only consumer to business transactions for personal, family or household purposes are covered by the proposed rule, including bill payment services.
One of the proposed changes loosens the disclosure requirements of the rule. See https://www.federalregister.gov/articles/2012/12/31/2012-31170/electronic-fund-transfers-regulation-e for all revisions to the proposed rule. Under the original proposed rule a provider would have been required to disclose to the “sender ” (a consumer located in the United States) the total amount of any foreign taxes and fees that would be assessed on the amount transferred. Providers were concerned that they may not have enough information from the sender to determine all the taxes and fees that would be assessed. The new proposed rule allows providers to rely on a sender’s representations regarding these variables and to estimate such taxes and fees by disclosing the highest possible foreign taxes and fees that could be imposed.
Another proposed change would also ease the requirement that all foreign taxes and fees be disclosed, by obligating providers only to disclose foreign taxes and fees imposed by a central government, not by sub-national jurisdictions.
Finally, where a transfer ends up in the wrong account due to incorrect information provided by the sender, the original proposed rule required providers to either refund the funds provided by the sender or to resend the transfer at no cost to the sender. A proposed change would only require a provider to attempt to recover the sent funds, but if those funds could not be recovered the provider would not be liable for the misdirected funds. In cases where transfers are resent by the provider, the proposed change would also allow the provider to make oral, streamlined disclosures.
All of the proposed changes were made after remittance transfer providers expressed concern that that original proposed rule could put them out of the business of transferring international funds for consumers. The original proposed rule was scheduled to take effect on February 7, 2013, but the CFPB has proposed to delay that date to allow comments on the proposed changes, which are due on January 30, 2013.