CFPB Demands Wise to Pay Over $2 Million: Key Insights on the Enforcement Action
Wise, a financial technology company based in London, has come under scrutiny for allegedly promoting misleading fees and failing to adequately disclose exchange rates and additional costs, according to the Consumer Financial Protection Bureau (CFPB). This situation highlights the critical importance of transparency in the financial services industry, particularly for businesses operating in the remittance sector.
Misleading Advertising Practices by Wise
The CFPB revealed that Wise misled customers through various communications, including emails and blog posts. The company advertised benefits such as:
- Lower ATM fees
- Free withdrawals
- Other enticing customer perks
However, the bureau stated, “Wise led customers in the US to believe these perks applied to them, when they, in fact, did not.”
Failure to Disclose Accurate Fees
In addition to misleading advertising, Wise was found to have several compliance issues:
- Failure to disclose accurate fees for customers funding prepaid accounts via credit cards using Apple Pay or Google Pay.
- Inadequate disclosure of exchange rates.
- Not refunding fees when funds were unavailable to the recipient by the promised date.
Financial Penalties Imposed on Wise
As a result of these violations, the CFPB has mandated that Wise pay:
- $450,000 to affected customers
- $2.025 million to the regulator’s victims relief fund
Regulatory Response and Industry Implications
CFPB Director Rohit Chopra commented on the situation, stating, “By deceiving customers, Wise gave itself an unfair advantage over other competitors in the remittances market.” He emphasized the balance between utilizing new technology to streamline money transfers and the necessity for companies to maintain transparency and adhere to established laws.
For more information on consumer protection and financial regulations, visit the CFPB website.
