CFPB warns providers to stop junk fees on international money transfers

If you’ve ever sent money abroad, you’ll probably have seen ‘low’ or ‘no fees’ advertised, but then paid more and / or received less than what you expected. That’s because banks and providers often hide fees. One sneaky way they do this is by giving you a worse exchange rate than the one you find on Google and making good money off the margin.

This has been common industry practice, and hardworking Americans have paid the price: U.S. consumers lost $15.4 billion in exchange rate markups over the last three years alone.

Hidden remittance fees = junk fees!

But recently, consumers started to get smart and called out providers when they were being ripped off. In fact, now 81% of Americans agree that hidden fees included in a currency exchange transfer (i.e. FX markups) are ‘junk’ fees.

Last week the U.S. consumer watchdog, the Consumer Financial Protection Bureau, said it thinks these types of hidden fees are junk fees too. The CFPB announced new action to stop false claims of “free” international money transfers and specifically called out the use of inflated exchange rates as a junk fee:

“Consumers should not be paying junk fees on international money transfers that are advertised as free,” said CFPB Director Rohit Chopra. “The CFPB will continue to work with law enforcement to ensure companies don't illegally burden families with fees or inflated exchange rates using false or misleading claims.” 

What does this mean for US consumers?

This is a major step forward to deliver true price transparency to anyone in the US sending money abroad, including immigrants and expats staying connected to family and friends in other countries, and Americans living, working, studying or retiring internationally. 

At Wise, we applauded these efforts, as we've advocated for transparency in exchange rate markups since our founding. We look forward to the millions of Americans who send money internationally to benefit from this important change. 

The work isn’t done yet - here’s how you can help!

So, will “fee-free” advertising disappear tomorrow? Unlikely. 

As we’ve seen in other countries that have introduced price transparency rules, providers may try to find loopholes and continue to hide fees. The good news is consumers like you can help make sure providers actually change their ways in line with the new guidance.

Submit a complaint about remittance payments by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).