The Consumer Financial Protection Bureau has amended its consent order with international remittance company Wise, updating enforcement action that originally addressed claims of misleading fee advertising and inadequate disclosure practices in money transfer services.
The CFPB's modification to the January 30, 2025 consent order resolves allegations that Wise advertised inaccurate fees to consumers and failed to properly disclose exchange rates and other costs associated with international money transfers. The amendment represents continued regulatory oversight of digital financial services and consumer protection in the remittance industry.
Wise, formerly known as TransferWise, operates as a major player in the international money transfer market, offering services that compete with traditional banking institutions and other remittance providers. The company has built its business model around providing transparent, low-cost international transfers through its digital platform.
The original consent order addressed fundamental consumer protection concerns in the remittance industry. Fee transparency has long been a focus of CFPB enforcement efforts, particularly in markets where consumers may have limited understanding of the true costs of financial services. International money transfers often involve multiple fees and exchange rate markups that can significantly increase the total cost to consumers.
Regulatory requirements for remittance providers include clear disclosure of fees, exchange rates, and the total amount that will be delivered to recipients. The Electronic Fund Transfer Act and its implementing regulation, known as Regulation E, establish specific disclosure requirements for remittance transfers. These rules require providers to give consumers accurate estimates of fees and exchange rates before they send money.
The CFPB's enforcement action against Wise reflects broader regulatory scrutiny of digital financial services. As traditional banking services increasingly move online and new technology companies enter the financial services market, regulators have focused on ensuring that consumer protections keep pace with technological innovation.
Fee advertising practices in the remittance industry have drawn particular attention from regulators. Companies that advertise low or no fees but fail to disclose exchange rate markups or other charges can mislead consumers about the true cost of transfers. This practice can be especially problematic for immigrant communities and other consumers who rely heavily on remittance services to send money to family members abroad.
The amendment to the Wise consent order suggests that the original settlement may have required modification based on implementation challenges or additional information that came to light during the compliance process. Consent order amendments are not uncommon in CFPB enforcement cases, as they allow regulators and companies to address practical issues that arise during settlement implementation.
For Wise, the amended consent order likely includes updated compliance requirements, monitoring provisions, or remediation measures. The company will need to demonstrate that it has implemented adequate systems to ensure accurate fee disclosure and exchange rate transparency across its platform.
The remittance industry has seen increased competition in recent years, with traditional providers like Western Union facing challenges from digital newcomers offering more transparent pricing and user-friendly interfaces. This competitive environment has generally benefited consumers through lower costs and better service, but it has also created new regulatory challenges as business models evolve.
Consumer advocates have long pushed for greater transparency in remittance services, arguing that hidden fees and unclear exchange rates disproportionately affect low-income consumers and immigrant communities. The CFPB's enforcement actions in this area support these advocacy efforts by holding companies accountable for misleading practices.
The timing of the amendment, coming several months after the original consent order, indicates that the CFPB continues to monitor compliance with settlement terms and is prepared to make adjustments as necessary. This approach reflects the bureau's commitment to ensuring that enforcement actions result in meaningful changes to business practices rather than simply imposing penalties.
Looking ahead, the amended consent order will likely serve as a reference point for other remittance providers seeking to ensure compliance with disclosure requirements. Companies in the industry will need to carefully review their advertising practices and disclosure procedures to avoid similar enforcement actions.
The case also highlights the importance of ongoing compliance monitoring in the digital financial services sector. As technology platforms continue to evolve and expand their service offerings, regulatory oversight must adapt to address new risks to consumer protection while supporting innovation in financial services.
For consumers using international money transfer services, the enforcement action serves as a reminder to carefully review all fees and charges before sending money. Understanding the total cost of transfers, including both explicit fees and exchange rate markups, remains essential for making informed decisions about remittance services.