On April 8, a federal court granted the CFPB's motion to withdraw from its joint enforcement action against a global money transmitter. The lawsuit, originally filed in April 2022 in partnership with the New York Attorney General, alleged violations of the Electronic Fund Transfer Act (EFTA), including the Remittance Rule under its implementing Regulation E.
The complaint detailed a range of statutory and regulatory violations affecting remittance transfers used by consumers to send funds abroad. The core allegations included:
- Inaccurate availability disclosures. The company allegedly failed to accurately disclose the date on which funds would be available to recipients.
- Deficient error resolution. The company purportedly failed to promptly investigate consumer complaints, issue required fee refunds, or provide mandated explanations and documentation.
- Noncompliant internal procedures. Regulators alleged the company lacked adequate written policies to identify covered errors, ensure timely investigations, and retain necessary compliance documentation.
- Unfair acts under the CFPA. The Bureau and the New York AG alleged that the company unnecessarily delayed remittance transfers and refunds after completing internal screenings, leaving consumers without timely access to funds.
The lawsuit will now proceed with the New York AG as the sole plaintiff.
Putting It Into Practice: The CFPB's withdrawal from this case is consistent with a broader trend of reassessing enforcement actions initiated under prior leadership (previously discussed here and here). While the Bureau appears to be narrowing its enforcement focus, state regulators—such as the New York Attorney General—continue to pursue consumer protection matters with vigor (discussed here). Financial services companies should not interpret reduced federal activity as a reprieve.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
