The Consumer Financial Protection Bureau (CFPB) has imposed a penalty of approximately $2 million on the U.K.-based remittance firm Wise, citing “a series of unlawful practices.”
The CFPB accuses Wise of misrepresenting fees in its advertising and failing to adequately disclose exchange rates and additional costs. According to the agency, the fintech company misled U.S. customers regarding its ATM fees and did not properly inform them of other charges. Furthermore, it alleges that when funds were not delivered on time, Wise neglected to refund the remittance fees within the legally required timeframe, resulting in “hundreds of thousands of dollars” in damages to consumers.
In light of these findings, the agency has ordered the publicly traded Wise to pay around $450,000 in restitution to affected customers, along with a civil penalty of $2.025 million.
“By misleading consumers, Wise gained an unfair competitive edge in the remittances sector,” CFPB Director Rohit Chopra stated in an official comment. “While new technologies can enhance the cost-effectiveness and convenience of money transfers, it is imperative that companies maintain honesty and adhere to established regulations.”
Wise operates in the United States through its wholly owned subsidiary, Wise US. The company recently announced an expansion into the Mexican market.
A representative for Wise told TechCrunch that the CFPB performed a “routine examination of Wise US Inc. for compliance with various U.S. financial laws” from June 2020 to May 2021.
In February 2022, the CFPB flagged several issues that Wise claims it was “inadvertently operating in ways the Bureau found necessary to rectify.”
Wise stated that it “proactively and voluntarily reimbursed” the impacted customers a total of $450,000, and confirmed that it “fully cooperated with the CFPB and promptly addressed all identified concerns,” with most resolved by November 2022.
The company added that it reached an agreement with the Bureau on January 30, asserting: “At Wise, we continuously enhance our compliance program and processes to ensure a robust framework, particularly in the U.S., where we have fortified our teams and developed substantial tools.”
This incident underscores a growing trend of fintech firms facing penalties for deceptive practices. Recently, Block, the parent company of Cash App, consented to pay an $80 million fine as part of a settlement for violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) regulations.
Interested in more fintech news? Sign up for TechCrunch Fintech here.
Have a tip to share? Reach out via email at maryann@techcrunch.com or send a message on Signal at 408.204.3036. You can also send a note to the entire TechCrunch team at tips@techcrunch.com. For more secure communication options, click here to contact us, which includes SecureDrop and links to encrypted messaging apps.
Compiled by Techarena.au.
Fanpage: TechArena.au
Watch more about AI – Artificial Intelligence
