Nonbank Fintech Settles with CFPB to Resolve EFTA and CFPA Claims

The CFPB recently entered into a consent order with a nonbank fintech company to resolve claims of EFTA and CFPA violations.  As part of the settlement the company will pay nearly $1.5 million in consumer restitution and another $1.5 million in civil penalties.

The company offered United States consumers international remittance transfer services.  Following an investigation, the CFPB found that the company had violated certain provisions of the EFTA and its implementing regulation, Regulation E.  The company had included impermissible language in its service agreement purporting to waive consumer protections under the EFTA.  For some transfers, the company had failed to provide receipts within one business day.  Additionally, the company’s pre-payment disclosures and receipts did not use required terms, or substantially similar terms.  The CFPB also found that the company had failed to develop and maintain policies and procedures for addressing errors that occurred during transfers.

The CFPB also found that the company had deceptively advertised the speed and cost of its services in violation of the CFPA.  While the company had advertised transfer speeds ranging from instantly to up to 30 seconds, many transfers took longer to be delivered.  The company had also advertised no fees for transfers to Nigeria, but that was not the case.  Additionally, the company’s violations of the EFTA and Regulation E also constituted violations of the CFPA.

As part of the settlement, the company will have to create and implement a compliance plan designed to ensure compliance with the EFTA and Regulation E, among other things.  The company will also have to pay nearly $3 million in consumer restitution and civil penalties.

The company neither admits nor denies the allegations.