The Consumer Financial Protection Bureau (CFPB) has hit UK-based remittance company Wise with about a $2 million fine for what it described as “a series of illegal actions.”
Those actions include advertising inaccurate fees and failing to properly disclose exchange rates and other costs, the CFPB alleges. Specifically, the agency claims that the fintech company misled customers in the United States about its ATM fees and failed to properly disclose other fees. It also alleges that when people sent money that did not arrive on time, Wise failed to refund the remittance fees in the timeframe required by law. This led to “hundreds of thousands of dollars” in harm to consumers, charged the CFPB.
The agency has ordered publicly-traded Wise to pay about $450,000 in redress to harmed consumers and a $2.025 million civil money penalty.
“By deceiving customers, Wise gave itself an unfair advantage over other competitors in the remittances market,” said CFPB Director Rohit Chopra in a written statement. “New technology can help make money transfers cheaper and more convenient, but companies must be truthful and live up to longstanding law.”
The company does business in the US through a wholly owned subsidiary, Wise US. It recently announced an expansion into Mexico.
In a statement provided to TechCrunch, a Wise spokesperson said the CFPB had conducted between June 2020 and May 2021 a “routine examination of Wise US Inc. for compliance with various US laws pertaining to financial providers.”
The CFPB then in February 2022 highlighted certain issues where Wise claims it had “inadvertently been operating in ways the Bureau deemed necessary to address.”
Wise said that it “proactively and voluntarily compensated in full,” the affected customers a total of $450,000. It also says that it “cooperated fully with the CFPB and immediately worked to address all identified issues,” with the majority resolved by November 2022.
The company said that it reached an agreement with the Bureau on January 30, adding: “At Wise, we continuously invest in our compliance program and processes to ensure we maintain a robust framework, including in the US, where we have strengthened our teams and built substantial tooling.”
This is the latest example of fintech companies being fined for deceptive practices. Block, the parent company of Cash App, recently agreed to pay an $80 million fine as part of a settlement related to violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) regulations.
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