CFPB and New York Attorney General Sue Remittance Provider for Repeated Violations
Commentary by Ilan T. Graff
The Consumer Financial Protection Bureau ("CFPB") and the New York Attorney General ("NYAG") filed a Complaint against a U.S.-based international money transfer company for alleged systemic and repeated violations of the Electronic Fund Transfers Act and Subpart B to Regulation E ("Requirements for Remittance Transfers"). The Defendant is one of the biggest remittance providers in the United States.
In their Complaint, filed in the U.S. District Court for the Southern District of New York, the CFPB and NYAG alleged that the Defendant:
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Failed to Timely Transmit Money to Customers: The CFPB and NYAG alleged that this failure resulted in "needless delays and [harm to] people who were relying on that money to pay for necessary living expenses[.]"
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Failed to Teach Employees How to Resolve Disputes: The CFPB and NYAG alleged that the Defendant failed to (i) teach its employees how to comply with laws related to resolving disputes, (ii) report to customers the results of its error investigations and (iii) accurately disclose the length of time that funds would be available to recipients abroad.
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Failed to Document Policies and Procedures: The CFPB and NYAG alleged that the Defendant failed to (i) make and enforce policies and procedures to ensure compliance with money-transferring laws and (ii) keep required documentation of compliance with certain error resolution requirements.
The CFPB and NYAG seek monetary and injunctive relief, as well as a financial penalty.
In a statement on the case, CFPB Director Rohit Chopra emphasized that "the Consumer Financial Protection Bureau along with the New York Attorney General is suing [the company] because it has not been following the law despite repeated warnings." He highlighted the agency's ongoing interest in (i) pursuing corporate repeat offenders, (ii) strengthening cooperation with state attorneys general and financial regulators and (iii) ensuring compliance with the Remittance Transfer Rule by nonbanks.
Commentary
Director Chopra's statement further aligns the CFPB with the DOJ's and the SEC's emphasis on targeting repeat corporate offenders. Notably, Director Chopra highlighted past FTC and DOJ enforcement actions against the company that concerned conduct largely unrelated to remittances, signaling that the CFPB will take a broad view with respect to what constitutes corporate recidivism.