CFPB Report May 3, 2013

CFPB Issues Final Remittance Rule

On Tuesday, April 30, 2013, the CFPB finalized (again) its rule on international money transfers (remittances). This finalized rule is intended to preserve new consumer protections while facilitating industry’s compliance with the rule. The rule will take effect October 28, 2013. 

Director Cordray remarked, “We are dedicated to protecting consumers who send money abroad and to preserving their access to these services. Today’s final rule achieves these goals by maintaining the rule’s crucial new consumer protections while facilitating compliance for providers of remittance transfers.” 

As proposed, the rule would have had significant adverse consequences for consumers and would have decreased the availability of remittance transfer services and products. The requirement to include recipient institution fees and foreign taxes in remittance transfer disclosures would have impaired consumers’ ability to effectively comparison shop between providers and cause consumers to unnecessarily overfund transfer amounts. The industry was also concerned error liability was inappropriately allocated and the process was overly complex. CBA expressed these and other concerns to the agency in several comments. 

The CFPB made the following changes in the final rule:

  • Disclosure of institution fees and foreign taxes: Remittance transfer providers must disclose certain fees, such as a provider’s own fees and those charged by an agent of the provider or intermediary institution. The requirement that providers disclose foreign taxes or, if that institution is not the provider’s agent, fees imposed by a recipient institution for receiving transfers into an account, has been made optional. Providers must include, where applicable, a disclaimer these fees and taxes may apply.
  • Errors from incorrect account information: Under the final rule, when funds are deposited into the wrong account because the sender provided an incorrect account number or routing number and certain other conditions are satisfied, the provider would be required to attempt to recover the funds but would not bear the cost of funds that cannot be recovered.

A more detailed analysis of the rule and statement from CBA is available here.  

CFPB Issues Civil Penalty Fund Final Rule

On Friday, April 26, 2013, the CFPB issued a final rule aimed at governing administration of the agency’s Civil Penalty Fund (CPF). At the same time, the CFPB issued proposed revisions to the rule for public comment. Although the final rule is effective immediately upon publication, the agency is seeking comment on “the choices reflected in the Final Rule and on possible revisions, adjustments, refinements, or other changes to the rule.” Comments on the proposal will be due 60 days after publication in the Federal Register. 

"Congress directed the Bureau to establish the Civil Penalty Fund in order to compensate people who were harmed by illegal actions," said Director Cordray. "Today's rule will allow us to do this in a transparent, responsible way." 

The CFPB is seeking comments specifically on possibly broadening the category of victims who are eligible for payments.  The Bureau also seeks comment on how it might identify the types of activities for which civil penalties were imposed.

CFPB Amends CARD Act

On Monday, April 29, 2013, the CFPB issued final amendments to provisions of the CARD Act making it easier for stay-at-home spouses or partners over the age of 21 to qualify for credit cards. The agency proposed the amendment in October 2012, which allows credit card issuers to assess other household income when making determinations to issue or increase credit. The Act originally required issuers to evaluate a consumer’s ability to pay before opening a new credit card account or increasing a credit limit. Under those provisions, the issuer would be limited to consideration of the individual card applicant’s independent income or assets. 

“Stay-at-home spouses or partners who have access to resources that allow them to make payments on a credit card can now get their own cards,” said Director Cordray. “Today’s final rule is an example of the Bureau’s commitment to working with consumers and financial institutions in order to ensure responsible access to credit for American families.”

CFPB Issues Policy Recommendations for Financial Literacy

On Tuesday, April 30, 2013, the CFPB released a white paper outlining policy recommendations for financial literacy. At a conference held on the same day, Director Cordray stressed the importance of consumer financial education in American schools. 

“Financial education should be as fundamental as the education we are all required to receive in American history and government,” Cordray said. “We must be deliberate about pursuing financial education in our schools. Failing to do so is to condemn boys and girls to make the same mistakes others have made before them by enrolling them in the ‘school of hard knocks,’ which we all know is no school at all. It is the antithesis of education for each generation to have to learn the same lessons the hard way. It is utterly unacceptable.”