Consumer Financial Protection Circular 2024-02: Deceptive Marketing Practices About the Speed or Cost of Sending a Remittance Transfer

Publisher lists this guidance as withdrawn/rescinded: Consumer Financial Protection Circular 2024-02: Deceptive Marketing Practices About the Speed or Cost of Sending a Remittance Transfer, 89 FR 27357 (Apr. 17, 2024); withdrawn on May 12, 2025 .

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Rules and Regulations
Federal Register
27357
Vol. 89, No. 75
Wednesday, April 17, 2024
1
Reg. E, 12 CFR part 1005 et seq.
2
CFPB, Remittance Rule Assessment Report, at 7
(Revised Apr. 24, 2019), https://files.consumer
finance.gov/f/documents/bcfp_remittance-rule-
assessment_report_corrected_2019-03.pdf.
3
See Daivi Rodima-Taylor, The Uneven Path
Toward Cheaper Digital Remittances, Migration
Information Source (June 22, 2023), https://
www.migrationpolicy.org/article/cheaper-digital-
remittances; Daniel Webber, Remittances’ Shift to
Digital: Driving Change in an Industry Split
Between Yesterday and Tomorrow, Forbes (Mar. 21,
2023), https://www.forbes.com/sites/danielwebber/
2023/03/21/remittances-shift-to-digital-driving-
change-in-an-industry-split-between-yesterday-and-
tomorrow/?sh=77f07495341.
4
See 2012 Final Rule, 77 FR 6194, 6199 (Feb. 7,
2012). See also Annette LoVoi, Sending Money: The
Path Forward, Appleseed, at 12 (May 2016), http://
www.ctappleseed.org/wp-content/uploads/2016/04/
Immigrant-Finances-Final-Appleseed-Report-on-
Remittance-Use-Sending-Money-Home-5.26.16.pdf;
ICF Macro, Summary of Findings: Design and
Testing of Remittance Disclosures, Report to the
Board of Governors of the Federal Reserve System,
at 2–4 (Apr. 20, 2011), https://www.federalreserve.
gov/econresdata/bcreg20110512_ICF_Report_
Remittance_Disclosures_(FINAL).pdf.
5
See The World Bank, Remittance Prices
Worldwide: Making Markets More Transparent,
https://remittanceprices.worldbank.org/ The
database also reflects that a range of costs exist for
sending a remittance transfer in a given corridor.
CONSUMER FINANCIAL PROTECTION
BUREAU
12 CFR Part X
Consumer Financial Protection
Circular 2024–02: Deceptive Marketing
Practices About the Speed or Cost of
Sending a Remittance Transfer
AGENCY: Consumer Financial Protection
Bureau.
ACTION: Consumer financial protection
circular.
SUMMARY: The Consumer Financial
Protection Bureau (Bureau or CFPB) has
issued Consumer Financial Protection
Circular 2024–02, titled, ‘‘Deceptive
Marketing Practices About the Speed or
Cost of Sending a Remittance Transfer.’’
In this circular, the Bureau responds to
the question, ‘‘When do remittance
transfer providers violate the
prohibition on deceptive acts or
practices in the Consumer Financial
Protection Act (CFPA) in their
marketing about the speed and cost of
sending a remittance transfer?’’
DATES: The Bureau released this circular
on its website on March 27, 2024.
ADDRESSES: Enforcers, and the broader
public, can provide feedback and
comments to Circulars@cfpb.gov.
FOR FURTHER INFORMATION CONTACT:
George Karithanom, Regulatory
Implementation & Guidance Program
Analyst, Office of Regulations, at 202–
435–7700 or at: https://reginquiries.
consumerfinance.gov/. If you require
this document in an alternative
electronic format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
Question Presented
When do remittance transfer
providers violate the prohibition on
deceptive acts or practices in the
Consumer Financial Protection Act
(CFPA) in their marketing about the
speed and cost of sending a remittance
transfer?
Response
Remittance transfer providers may be
liable under the CFPA for deceptive
marketing about the speed or cost of
sending a remittance transfer. Providers
may be liable under the CFPA for
deceptive marketing practices regardless
of whether the provider is in
compliance with the disclosure
requirements of the Remittance Rule.
For example, among other things, it may
be deceptive to:
•Market remittance transfers as being
delivered within a certain time frame,
when transfers actually take longer to be
made available to recipients;
•Market remittance transfers as ‘‘no
fee’’ when in fact the provider charges
fees;
•Market promotional fees or
promotional exchange rates for
remittance transfers without sufficiently
clarifying when an offer is temporary or
limited;
•Market remittance transfers as
‘‘free’’ if they are not in fact free.
Background
Remittance Transfer Speed and Costs
Pursuant to the CFPB’s Remittance
Rule,
1
the term ‘‘remittance transfer’’
includes most electronic transfers of
funds sent by consumers in the United
States to recipients in other countries.
Consumers in the United States send
hundreds of billions of dollars in
remittance transfers to recipients in
foreign countries each year.
2
Remittance
transfers are often consumer-to-
consumer transfers of money by
immigrants sending financial support to
family and friends in other countries.
They also include other types of
transfers, such as transfers by
consumers in the United States to
Americans living temporarily abroad,
such as students. Consumers may send
remittance transfers regularly as an
ongoing source of financial assistance or
in other circumstances, such as an
occasional or emergency form of
support. Remittance transfers also
include cross-border consumer-to-
business payments for goods or services.
Consumers may choose among a range
of bank, credit union, and non-bank
money transmitters when sending a
remittance transfer. Non-bank money
transmitters have traditionally
dominated the market for remittance
transfers from the United States. In
recent years, new money transmitters
have emerged offering digital remittance
transfer services. Many established
money transmitters have also added
digital services, in addition to in-person
options for consumers to go to a store
or agent to send remittance transfers.
3

When sending remittance transfers,
consumers may consider a number of
key factors when deciding among
different providers, including the speed
of the transfer and its cost as well as
convenience, security, reliability, and
trust.
4

The speed of a remittance transfer
varies depending on the type of transfer
and provider. The World Bank
Remittance Prices Worldwide database
illustrates that a range of transfer speeds
can exist within a given remittance
corridor, with some providers, for
example, offering delivery in less than
an hour, and others offering delivery in
three to five days.
5

Costs can also vary significantly
within a remittance corridor.
Remittance transfer costs include fees
charged by the remittance transfer
provider including, if applicable, their
agents and third parties. Costs also
include any exchange rate costs applied
by the provider to the currency
conversion and governmental taxes. The
exchange rate offered to consumers
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27358 Federal Register/ Vol. 89, No. 75 / Wednesday, April 17, 2024 / Rules and Regulations
6
See 2012 Final Rule, 77 FR 6194 at 6196
(discussing the exchange rate as a component of
cost). See also CFPB, Report on Remittance
Transfers, at 12–13 (July 20, 2011), https://
www.consumerfinance.gov/wp-content/uploads/
2011/07/Report_20110720_RemittanceTransfers.pdf
(discussing the ‘‘well-recognized’’ concept of
exchange rate spread in the remittance transfer
industry).
7
Reg. E, 12 CFR 1005.31.
8
12 U.S.C. 5531. The CFPB has taken public
action against multiple remittance transfer
providers to enforce various provisions of the CFPA
and the Remittance Rule. See Chime, Inc. d/b/a
Sendwave, No. 2023–CFPB–0012 (CFPB filed Oct.
17, 2023); Servicio UniTeller, Inc., No. 2022–CFPB–
0012 (CFPB filed Dec. 22, 2022); Choice Money
Transfer, Inc. d/b/a Small World Money Transfer,
No. 2022–CFPB–0009 (CFPB filed Oct. 4, 2022);
CFPB v. MoneyGram International, Inc., No. 22–cv–
3256 (S.D.N.Y. filed Apr. 21, 2022) (pending);
Envios de Valores la Nacional Corp., No. 2020–
BCFP–0025 (CFPB filed Dec. 21, 2020); Sigue
Corporation, et al., No 2020–BCFP–0011 (CFPB
filed Aug. 31, 2020); Trans-Fast Remittance LLC,
also doing business as New York Bay Remittance,
No. 2020–BCFP–0010 (CFPB filed Aug. 31, 2020);
Maxitransfers Corp., No. 2019–BCFP–0008 (CFPB
filed Aug. 27, 2019).
9
CFPB, Supervisory Highlights, 87 FR 26727,
26734 (May 5, 2022).
10
Chime, Inc. d/b/a Sendwave, No. 2023–CFPB–
0012 (Oct. 17, 2023) (consent order).
11
Id. at 8. The CFPB also found deceptive acts or
practices in actions against Trans-Fast Remittances
LLC and Maxitransfers Corp. See Trans-Fast
Remittance LLC, also doing business as New York
Bay Remittance, No. 2020–BCFP–0010 (CFPB filed
Aug. 31, 2020) (consent order); Maxitransfers Corp.,
No. 2019–BCFP–0008 (CFPB filed Aug. 27, 2019)
(consent order).
12
See, e.g., Consumer Complaint 7007332,
https://www.consumerfinance.gov/data-research/
consumer-complaints/search/detail/7007332;
Consumer Complaint 6845292, https://
www.consumerfinance.gov/data-research/
consumer-complaints/search/detail/6845292;
Consumer Complaint 1972064, https://
www.consumerfinance.gov/data-research/
consumer-complaints/search/detail/1972064.
often reflects a spread—meaning, a
percentage difference between the retail
exchange rate offered to the consumer
and some wholesale exchange rate.
6

Remittance transfer providers utilize
different pricing strategies when
determining the fees and exchange rate
they charge to consumers for remittance
transfers.
Transparency Concerns Around
Remittance Transfer Speed and Costs
Prior to the passage of the Dodd-Frank
Wall Street Reform and Consumer
Financial Protection Act (Dodd-Frank
Act), Federal consumer protection laws
generally did not apply to remittances,
and remittance transfer providers were
not consistently required to disclose
applicable fees, exchange rates, transfer
speeds, and the amount to be received
in a transaction. Consumers thus did not
always know how much money would
be received on the other end and were
not able to easily comparison shop
among providers.
With the Dodd-Frank Act’s
amendments to the Electronic Fund
Transfer Act and the promulgation of
the Remittance Rule, remittance transfer
providers are now generally required to
disclose certain information to
consumers before the consumer pays for
a transfer and also when payment is
made.
7
Before the consumer pays for a
transfer, the information a remittance
transfer provider must disclose includes
(but is not limited to): as applicable, the
amount that will be transferred to the
designated recipient in the currency in
which the remittance transfer is funded;
any fees imposed and any taxes
collected on the remittance transfer; the
total amount of the transaction, which is
the sum of the amount that will be
transferred and any fees imposed and
any taxes collected, in the funding
currency; the exchange rate used by the
provider for the remittance transfer; any
covered third-party fees; and the
amount that will be received by the
designated recipient in the currency in
which the funds will be received. The
receipt that consumers generally receive
when payment is made must contain the
same information. In addition, the
receipt must disclose the date in the
foreign country on which funds will be
available to the designated recipient.
Compliance with the Remittance Rule
disclosure requirements does not
obviate the obligation to refrain from
misleading marketing practices. In
particular, remittance transfer providers
must ensure their marketing practices
do not violate the prohibition of unfair,
deceptive, or abusive acts or practices in
the CFPA.
8

The CFPB has identified problems
with transparency and accuracy in
marketing practices about the speed of
a remittance transfer in its supervision
of remittance transfer providers and
enforcement of the CFPA’s prohibition
against deceptive acts or practices. In
the CFPB’s Spring 2022 Supervisory
Highlights, the CFPB discussed
examiners’ findings that remittance
transfer providers made false and
misleading representations about the
speed of remittance transfers.
9
In
October 2023, the CFPB issued a
consent order against Chime Inc., d/b/a
Sendwave, finding that the remittance
transfer provider made misleading
statements in advertisements about the
speed and cost of its services, in
violation of the CFPA’s prohibition on
deceptive acts or practices.
10
This
provider claimed in social media
marketing that remittance transfers
would be delivered ‘‘instantly,’’ in ‘‘30
seconds’’ or ‘‘within seconds,’’ and
would incur ‘‘no fees,’’ when in fact
transfers often took much longer, and
the provider charged a fee.
11

In addition, consumers have reported,
and the CFPB has observed, problems
with price transparency in the
marketing practices of remittance
transfer providers, resulting in
consumers encountering unexpected
costs.
12
The CFPB has received
consumer complaints about promotional
pricing by remittance transfer providers
who do not sufficiently inform
consumers that the advertised fee or
exchange rate is only a limited scope or
temporary offer. The CFPB has also
observed marketing claims by
remittance transfer providers that may
mislead consumers about the scope or
duration of a temporary low or ‘‘no fee’’
offer or promotional exchange rate.
The CFPB has also received consumer
complaints about marketing that omits
or obscures the cost of a remittance
transfer. Marketing claims by remittance
transfer providers may fail to
communicate the full cost of a
remittance transfer, such as advertising
that transfers are ‘‘free’’ or advertising
that prominently emphasizes zero fees
while only including a vaguely worded
statement that additional costs related to
the exchange rate may apply. Some of
these statements use technical jargon or
feature confusing language.
The CFPB has also received consumer
complaints about companies that market
‘‘free’’ remittance transfers through
digital wallet and other prepaid
products, but that fail to sufficiently
disclose costs for currency conversion
or for withdrawing funds from the
product. Companies that offer
remittance transfers through digital
wallets and other prepaid products
often market them as a faster and
cheaper way to send remittance
transfers. Certain companies’ websites
market ‘‘free account-to-account
transfers’’ or that ‘‘receiving money from
a friend’’ is free. Providers may disclose
only in fine print, however, that these
transfers are only free when there is no
currency conversion, and that for the
recipient to withdraw and use funds in
their local currency, they must pay a
currency conversion fee. In addition,
some digital wallet providers may not
make clear that recipients of a
remittance transfer must pay a fee to
withdraw funds from the digital wallet
or other prepaid product. Examples of
such fees include fees to transfer funds
to an external bank account, credit card,
or prepaid card. Consumers have
complained to the CFPB that these fees
are unexpected when they convert
currencies and withdraw funds
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27359 Federal Register/ Vol. 89, No. 75 / Wednesday, April 17, 2024 / Rules and Regulations
13
See, e.g., Consumer Complaint 2994206,
https://www.consumerfinance.gov/data-research/
consumer-complaints/search/detail/2994206.
14
12 U.S.C. 5531, 5536.
15
See FTC Policy Statement on Deception (Oct.
14, 1983), https://www.ftc.gov/system/files/
documents/public_statements/410531/
831014deceptionstmt.pdf.
16
See id.
17
See 2012 Final Rule, 77 FR 6194 at 6199.
18
Chime, Inc. d/b/a Sendwave, No. 2023–CFPB–
0012, at 8–9 (Oct. 17, 2023) (consent order).
19
See FTC, Policy Statement on Deception (Oct.
14, 1983).
20
See Kangni Kpodar, Patrick Amir Imam, How
Do Transaction Costs Influence Remittances? World
Development Vol. 177 (May 2024), https://doi.org/
10.1016/j.worlddev.2024.106537.
21
See 2012 Final Rule, 77 FR 6194 at 6199.
22
See FTC, Policy Statement on Deception (Oct.
14, 1983).
23
Chime, Inc. d/b/a Sendwave, No. 2023–CFPB–
0012, at 8 (Oct. 17, 2023) (consent order).
24
See FTC v. Davison Assocs., Inc., 431 F. Supp.
2d 548, 560 (W.D. Pa. 2006) (‘‘Disclaimers or
curative language must be ‘sufficiently prominent
and unambiguous’ such that the overall net-
impression of the communication becomes non-
deceptive.’’); FTC v. Roca Labs, Inc., 345 F. Supp.
3d 1375, 1392 (M.D. Fla. 2018) (‘‘Defendants cannot
avoid liability by exclusively advertising that the
product costs $480 without any caveats and then
burying the conditions of the discount in a separate
disclaimer.’’).
25
See FTC, Policy Statement on Deception (Oct.
14, 1983).
26
See FTC v. Davison Assocs., 431 F. Supp. 2d
548 at 560 (‘‘Disclaimers or curative language must
be ‘sufficiently prominent and unambiguous’ such
that the overall net-impression of the
communication becomes non-deceptive.’’).
27
CFPB, Consumer Financial Protection Circular
2023–01: Unlawful negative option marketing
practices (Jan. 19, 2023), https://www.consumer
finance.gov/compliance/circulars/consumer-
financial-protection-circular-2023-01-unlawful-
negative-option-marketing-practices/.
28
FTC, Policy Statement on Deception (Oct. 14,
1983). See also In re Intuit, Inc., No. 9408, at 43
(FTC Opinion, Jan. 19, 2024) (‘‘Disclaimers or
qualifications are not adequate to avoid liability
‘unless they are sufficiently prominent and
unambiguous to change the apparent meaning of
the claims and to leave an accurate impression.
Anything less is only likely to cause confusion by
creating contradictory double meanings.’’’) (quoting
Removatron Int’l Corp. v. FTC, 884 F.2d 1489, 1497
(1st Cir. 1989)); FTC v. Davison Assocs., 431 F.
Supp. 2d 548 at 560 (‘‘Disclaimers or curative
language must be ‘sufficiently prominent and
unambiguous’ such that the overall net-impression
of the communication becomes non-deceptive.’’);
FTC v. Roca Labs, 345 F. Supp. 3d 1375 at 1392
(‘‘Defendants cannot avoid liability by exclusively
advertising that the product costs $480 without any
caveats and then burying the conditions of the
discount in a separate disclaimer.’’).
transmitted through digital wallets and
other prepaid products.
13

Analysis
Under the CFPA, it is unlawful for a
provider of consumer financial products
or services to engage in deceptive acts
or practices.
14
A representation,
omission, act, or practice is deceptive if
it misleads or is likely to mislead the
consumer; the consumer’s interpretation
is reasonable under the circumstances;
and the misleading representation,
omission, act, or practice is material.
15

It is deceptive to market remittance
transfers as being delivered within a
certain time frame, when transfers
actually take longer to be made
available to recipients.
Remittance transfer providers violate
the CFPA’s prohibition on deceptive
acts or practices if they market
remittance transfers as being delivered
within a certain time frame, when
transfers actually take longer to reach
recipients. The CFPB ‘‘presumes that
express claims are material.’’
16

Furthermore, as noted above, the speed
of a remittance transfer is often a crucial
consideration for consumers sending
remittance transfers.
17
Recipients may
rely on remittance transfers for day-to-
day expenses or for time-sensitive
emergencies.
As illustrated in the CFPB’s action
against Chime Inc., d/b/a Sendwave,
marketing claims about the speed of
remittance transfers may violate the
prohibition on deceptive acts or
practices under the CFPA when the
actual time for delivery is longer than
advertised.
In the Sendwave case, the provider
told consumers that transfers would be
delivered ‘‘instantly,’’ ‘‘in 30 seconds,’’
or ‘‘within seconds.’’ These statements
were false and misleading because,
although a reasonable customer might
expect delivery within the time frame
advertised, in many instances, transfers
were not actually delivered instantly or
within seconds for many consumers.
18

In addition, as an express marketing
statement regarding a central
characteristic of the product—when
funds would be available to a
recipient—the misleading
representation was material.
19

Providers must thus take care not to
engage in deceptive acts or practices in
their marketing claims about the speed
of a remittance transfer.
It is deceptive to market transfers as
‘‘no fee’’ when in fact the remittance
transfer provider charges consumers
fees to send the remittance transfer.
Remittance transfer providers violate
the CFPA’s prohibition on deceptive
acts or practices if they market
remittance transfers as having ‘‘no fee,’’
when in fact the remittance transfer
provider charges consumers fees to send
the remittance transfer. The cost of
sending a remittance transfer is a central
consideration for consumers,
20
and, as
discussed above, fees are an important
component of the cost of a remittance
transfer.
21
Expressly misleading price
claims violate the prohibition on
deceptive practices.
22

For example, as alleged in the CFPB’s
action against Chime Inc., d/b/a
Sendwave, from at least 2021 to 2022,
Sendwave’s website advertised that
consumers could transfer funds from the
United States to Nigeria ‘‘with no fees.’’
In fact, consumers were charged fees on
all transfers from the United States to
Nigeria, despite Sendwave continuing to
promote its product as having ‘‘no fees’’
on its website with no qualification or
disclaimer.
23

The CFPB found that Sendwave’s
representations were likely to mislead
the consumer and that the consumer’s
interpretation would be reasonable
under the circumstances. Although
Sendwave disclosed a 1 percent transfer
fee in the FAQ section of its website,
this did not correct the misleading
statement or communication made at
the top of its web page and on a graphic
depicting its mobile app.
24
And as an
express marketing statement regarding a
central consideration for consumers
when sending a remittance transfer—
cost —, the misleading representation
about transfer fees was material.
25

It may be deceptive to market
promotional fees or promotional
exchange rates for remittance transfers
without sufficiently clarifying when the
offer is only limited or temporary.
Remittance transfer providers may
violate the CFPA’s prohibition on
deceptive acts or practices by
advertising promotional pricing for
remittance transfers without sufficiently
clarifying that the offer is only limited
or temporary in scope, even if the
promotional nature of the offer is
disclosed in fine print or later in the
transaction.
26
In such cases, consumers
may not understand the pricing is
limited and promotional and they may
not understand that the cost of sending
a remittance transfer through the
provider rises after the first or first few
transactions.
As the CFPB has articulated,
consumers may be reasonably misled
when financial service providers fail to
clearly and conspicuously disclose
material terms in advertising, such as
when and by how much charges will
increase.
27
Written disclosures or fine
print in marketing materials would
often be insufficient to correct a
misleading statement or representation
in marketing communications.
28
When
a consumer’s first contact with a
remittance transfer provider involves
deception, ‘‘the law may be violated
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27360 Federal Register/ Vol. 89, No. 75 / Wednesday, April 17, 2024 / Rules and Regulations
29
FTC, Policy Statement on Deception (Oct. 14,
1983).
30
FTC, Guide Concerning the Use of the Word
‘‘Free’’ and Similar Representations, 16 CFR
251.1(a)(2).
31
16 CFR 251.1(b).
32
16 CFR 251.1(c). See also In re Intuit, Inc., No.
9408, at 36–52 (FTC Opinion, Jan. 19, 2024); Lesley
Fair, Full Disclosure, FTC Business Blog (Sept. 23,
2014), https://www.ftc.gov/business-guidance/blog/
2014/09/full-disclosure (describing the FTC’s
‘‘4Ps’’—prominence, presentation, placement, and
proximity—four key considerations to help
business ensure their advertisements are clear and
conspicuous).
33
16 CFR 251.1(i) (applying same deception
analysis to terms similar to ‘‘free,’’ such as ‘‘gift,’’
‘‘given without charge,’’ or ‘‘other words or terms
which tend to convey the impression to the
consuming public than an article of merchandise or
service is ‘‘Free’’).
34
See In re Intuit, Inc., No. 9408 (FTC Opinion,
Jan. 19, 2024). The FTC regularly brings cases
against companies for ‘‘inadequate disclosures of
hidden charges in ostensibly ‘free’ offers and other
products or services.’’ FTC, Enforcement Policy
Statement Regarding Negative Option Marketing, 86
FR 60822, 60823 (Nov. 11, 2021). Both the CFPB
and the FTC have also taken action against
companies that advertised ‘‘free’’ products and
services and deceptively enrolled consumers in a
negative option plan. Cf. Equifax Inc. and Equifax
Consumer Services LLC, No. 2017–CFPB–0001
(filed Jan. 3, 2017) (consent order); Transunion
Interactive, Inc. et al., No. 2017–CFPB–0002 (filed
Jan. 3, 2017) (consent order); FTC v. Health
Formulas, LLC, No. 2:14–cv–01649 (D. Nev. 2016);
FTC v. Complete Weightloss Center, No. 1:08–cv–
00053 (D.N.D. 2008).
35
See In re Intuit, Inc., No. 9408, at 46 (FTC
Opinion, Jan. 19, 2024) (finding liability for false
misrepresentations about ‘‘free’’ services where it
was false
2
⁄3of the time).
even if the truth is subsequently made
known’’ to the consumer.
29

Representations in advertising about
‘‘no fee’’ remittance transfers or specific
promotional exchange rates without
sufficiently clarifying, when applicable,
that the offer is only limited or
temporary in scope are presumed to be
material, as they relate to cost, a key
consumer consideration.
In addition, such statements are likely
to be material because of their likely
impact on a consumer’s initial and
subsequent choice of remittance transfer
provider. The impact could be
particularly significant for promotions
offered to first-time customers who seek
to continue using the provider to send
remittance transfers. Such consumers
may face unexpected higher costs after
the expiration of the promotion and may
also face unexpected hurdles in
searching for a different provider. Had
they been aware of the limited
promotional nature of the offer, a
reasonable consumer may have chosen
a different provider.
It is deceptive to market remittance
transfers as ‘‘free’’ if they are not in fact
free.
Remittance transfer providers would
also violate the CFPA’s prohibition on
deceptive acts or practices by marketing
remittance transfers as ‘‘free’’ if they are
not actually free for the consumer. For
example, it may be deceptive to market
a remittance transfer as ‘‘free’’ if the
remittance transfer provider is imposing
costs on consumers through the
exchange rate spread for the transfer or,
with respect to digital wallets or other
prepaid products, if the provider
imposes costs to convert funds into a
different currency or to withdraw funds
from the product.
The FTC has articulated that, under
the FTC Act, offers of ‘‘free’’ services
‘‘must be made with extreme care so as
to avoid any possibility that consumers
will be misled or deceived.’’
30
‘‘The
word ‘free’ is a lure. It is the bait. It is
a powerful magnet that draws the best
of us against our will ‘to get something
for nothing.’ ’’ Book-of-the-Month Club,
Inc., 48 F.T.C. 1297, 1312 (1952), aff’d,
202 F.2d 486 (2d Cir. 1953).
A consumer should generally expect
that a ‘‘free’’ product or service is
indeed free, and that the seller ‘‘will not
directly and immediately recover, in
whole or in part, the cost of [] the
service.’’
31
The FTC has explained that
terms, conditions, and obligations that
apply to a ‘‘free’’ item should be set
forth clearly, conspicuously, and in
close conjunction with the offer of the
‘‘free’’ item, and they should further be
made clear at the outset of the offer ‘‘so
as to leave no reasonable probability
that the terms of the offer might be
misunderstood.’’
32
The same analysis
applies to the use of terms that are
similar to ‘‘free,’’ such as ‘‘gift’’ or
‘‘given without charge.’’
33

The FTC has recently reiterated that
representations of ‘‘free’’ in marketing
are deceptive when the offer is not in
fact free or when limitations,
restrictions, or hidden charges are
inadequately disclosed, such that the
claim is likely to mislead a reasonable
consumer about information important
to them when choosing a product.
34
As
applied here, marketing representations
of remittance transfers as free are
deceptive under the CFPA if they are
not actually free or when limitations,
restrictions, or hidden charges are
inadequately disclosed.
Marketing a remittance transfer as
‘‘free’’ is likely to cause a reasonable
consumer to believe they are sending a
remittance transfer without the provider
imposing a cost to the consumer. Such
interpretation would be incorrect—but
reasonable—in instances where the
remittance transfer provider is imposing
costs through the exchange rate spread
for the transfer. In this situation, a
remittance transfer provider’s claim that
the transfer is ‘‘free’’ would be false and
thus likely to be deceptive because there
was a cost imposed on the transfer
through the exchange rate spread.
35

Remittance transfer providers should
also be aware of the risk of deception
when marketing ‘‘free’’ remittance
transfers for digital wallets or other
prepaid products. A claim that
remittance transfers are ‘‘free’’ may be
misleading if the provider in fact
imposes costs for recipients to convert
funds into a different currency or to
withdraw funds from the product. In
these circumstances, marketing ‘‘free’’
transfers may constitute a
misrepresentation of the terms for the
remittance transfer provider’s services
that may mislead a reasonable
consumer, even with subsequent
disclosure of such fees.
About Consumer Financial Protection
Circulars
Consumer Financial Protection
Circulars are issued to all parties with
authority to enforce Federal consumer
financial law. The CFPB is the principal
Federal regulator responsible for
administering Federal consumer
financial law, see 12 U.S.C. 5511,
including the Consumer Financial
Protection Act’s prohibition on unfair,
deceptive, and abusive acts or practices,
12 U.S.C. 5536(a)(1)(B), and 18 other
‘‘enumerated consumer laws,’’ 12 U.S.C.
5481(12). However, these laws are also
enforced by State attorneys general and
State regulators, 12 U.S.C. 5552, and
prudential regulators including the
Federal Deposit Insurance Corporation,
the Office of the Comptroller of the
Currency, the Board of Governors of the
Federal Reserve System, and the
National Credit Union Administration.
See, e.g., 12 U.S.C. 5516(d), 5581(c)(2)
(exclusive enforcement authority for
banks and credit unions with $10
billion or less in assets). Some Federal
consumer financial laws are also
enforceable by other Federal agencies,
including the Department of Justice and
the Federal Trade Commission, the
Farm Credit Administration, the
Department of Transportation, and the
Department of Agriculture. In addition,
some of these laws provide for private
enforcement.
Consumer Financial Protection
Circulars are intended to promote
consistency in approach across the
various enforcement agencies and
parties, pursuant to the CFPB’s statutory
objective to ensure Federal consumer
financial law is enforced consistently.
12 U.S.C. 5511(b)(4).
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27361 Federal Register/ Vol. 89, No. 75 / Wednesday, April 17, 2024 / Rules and Regulations
1
See 15 U.S.C. 1691(a).
2
See 15 U.S.C. 1691(d)(2); 12 CFR 1002.9(a)(2)(i);
see also 12 CFR 1002.9(a)(2)(ii) (allowing creditors
the option of providing notice or following certain
requirements to inform consumers of how to obtain
such notice).
3
15 U.S.C. 1691(d)(3); 12 CFR 1002.9(b)(2).
4
15 U.S.C. 1691(d)(3); 12 CFR 1002.9(b)(2).
5
See Fischl v. Gen. Motors Acceptance Corp., 708
F.2d 143, 146 (5th Cir. 1983); S. Rep. 94–589, 94th
Cong., 2d Sess., at 4, reprinted in 1976 U.S.S.C.A.N.
403, 406.
6
12 CFR part 1002, (app. C), comment 3.
7
Like ECOA, FCRA also includes adverse action
notification requirements. See 15 U.S.C.
1681m(a)(2). For example, when a person takes
adverse action based in whole or in part on any
information contained in a consumer report and has
used a credit score, the person must disclose the
credit score and, among other items, the ‘‘key
factors that adversely affected the score of the
consumer,’’ the total of which shall generally not
exceed four (except if a key factor was the number
of inquiries made with respect to a consumer
report). 15 U.S.C. 1681g(f)(1)(C), 1681m(a)(2).
Although this circular is focused on ECOA’s
adverse action notification requirements, similar
principles apply under FCRA when a person must
disclose the ‘‘key factors that adversely affected the
credit score of the consumer.’’ 15 U.S.C.
1681g(f)(1)(C); see also 1681g(f)(2)(B) (defining ‘‘key
factors’’ to mean ‘‘all relevant elements or reasons
adversely affecting the credit score of the particular
individual, listed in the order of their importance
based on their effect on the credit score’’). Despite
similar underlying principles, the statutory
obligations under FCRA and ECOA are distinct. See
12 CFR part 1002 (supp. I), sec. 1002.9, para.
9(b)(2)–9 (‘‘Disclosing the key factors that adversely
affected the consumer’s credit score does not satisfy
the ECOA requirement to disclose specific reasons
for denying or taking other adverse action on an
application or extension of credit.’’). Moreover,
while ECOA’s requirements only apply to creditors,
FCRA’s adverse action notice requirements apply to
‘‘any person’’ that takes adverse action based in
Continued
Consumer Financial Protection
Circulars are also intended to provide
transparency to partner agencies
regarding the CFPB’s intended approach
when cooperating in enforcement
actions. See, e.g., 12 U.S.C. 5552(b)
(consultation with CFPB by State
attorneys general and regulators); 12
U.S.C. 5562(a) (joint investigatory work
between CFPB and other agencies).
Consumer Financial Protection
Circulars are general statements of
policy under the Administrative
Procedure Act. 5 U.S.C. 553(b). They
provide background information about
applicable law, articulate considerations
relevant to the Bureau’s exercise of its
authorities, and, in the interest of
maintaining consistency, advise other
parties with authority to enforce Federal
consumer financial law. They do not
restrict the Bureau’s exercise of its
authorities, impose any legal
requirements on external parties, or
create or confer any rights on external
parties that could be enforceable in any
administrative or civil proceeding. The
CFPB Director is instructing CFPB staff
as described herein, and the CFPB will
then make final decisions on individual
matters based on an assessment of the
factual record, applicable law, and
factors relevant to prosecutorial
discretion.
Rohit Chopra,
Director, Consumer Financial Protection
Bureau.
[FR Doc. 2024–08007 Filed 4–16–24; 8:45 am]
BILLING CODE 4810–AM–P
CONSUMER FINANCIAL PROTECTION
BUREAU
12 CFR Chapter X
Consumer Financial Protection
Circular 2023–03: Adverse Action
Notification Requirements and Proper
Use of Sample Forms
AGENCY: Consumer Financial Protection
Bureau.
ACTION: Consumer financial protection
circular.
SUMMARY: The Consumer Financial
Protection Bureau (CFPB) has issued
Consumer Financial Protection Circular
2023–03, titled, ‘‘Adverse action
notification requirements and the
proper use of the CFPB’s sample forms
provided in Regulation B.’’ In this
circular, the CFPB responds to the
question, ‘‘When using artificial
intelligence or complex credit models,
may creditors rely on the checklist of
reasons provided in CFPB sample forms
for adverse action notices even when
those sample reasons do not accurately
or specifically identify the reasons for
the adverse action?’’
DATES: The CFPB released this circular
on its website on September 19, 2023.
ADDRESSES: Enforcers, and the broader
public, can provide feedback and
comments to Circulars@cfpb.gov.
FOR FURTHER INFORMATION CONTACT:
George Karithanom, Regulatory
Implementation & Guidance Program
Analyst, Office of Regulations, at 202–
435–7700 or at: https://reginquiries.
consumerfinance.gov/.
SUPPLEMENTARY INFORMATION:
Question Presented
When using artificial intelligence or
complex credit models, may creditors
rely on the checklist of reasons provided
in CFPB sample forms for adverse action
notices even when those sample reasons
do not accurately or specifically identify
the reasons for the adverse action?
Response
No, creditors may not rely on the
checklist of reasons provided in the
sample forms (currently codified in
Regulation B) to satisfy their obligations
under ECOA if those reasons do not
specifically and accurately indicate the
principal reason(s) for the adverse
action. Nor, as a general matter, may
creditors rely on overly broad or vague
reasons to the extent that they obscure
the specific and accurate reasons relied
upon.
Analysis
The Equal Credit Opportunity Act
(ECOA), implemented by Regulation B,
makes it unlawful for any creditor to
discriminate against any applicant with
respect to any aspect of a credit
transaction on the basis of race, color,
religion, national origin, sex (including
sexual orientation and gender identity),
marital status, age (provided the
applicant has the capacity to contract),
because all or part of the applicant’s
income derives from any public
assistance program, or because the
applicant has in good faith exercised
any right under the Consumer Credit
Protection Act.
1
ECOA and Regulation B
require that, when taking adverse action
against an applicant, a creditor must
provide the applicant with a statement
of reasons for the action taken.
2
This
statement of reasons must be ‘‘specific’’
and indicate the ‘‘principal reason(s) for
the adverse action’’;
3
moreover, the
specific reasons disclosed must ‘‘relate
to and accurately describe the factors
actually considered or scored by a
creditor.’’
4
Adverse action notice
requirements promote fairness and
equal opportunity for consumers
engaged in credit transactions, by
serving as a tool to prevent and identify
discrimination through the requirement
that creditors must affirmatively explain
their decisions. In addition, such
notices provide consumers with a key
educational tool allowing them to
understand the reasons for a creditor’s
action and take steps to improve their
credit status or rectify mistakes made by
creditors.
5

The CFPB provides sample forms
(currently codified in Regulation B) that
creditors may use to satisfy their
adverse action notification
requirements, if appropriate. These
forms include a checklist of sample
reasons for adverse action which
‘‘creditors most commonly consider,’’
6

as well as an open-ended field for
creditors to provide other reasons not
listed. The sample forms are used by
creditors to satisfy certain adverse
action notice requirements under ECOA
and the Fair Credit Reporting Act
(FCRA), though the statutory obligations
under each remain distinct.
7
While the
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