People living in the United States often use mobile transfer apps to send money to family or loved ones living abroad. One of those apps, Chime Sendwave, has totaled more than $1 billion in money transfers each year.
That was a red flag to the Consumer Financial Protection Bureau, which is why it’s stepping in. The bureau said the mobile app has deceived consumers about the cost and speed of international money transfers by requiring consumers to waive their rights and protections.
“There’s a remittance rule in effect that provides consumers with protections in this very industry,” Michael Favretto, assistant deputy enforcement director at CFPB told WTOP.
The CFPB said the Chime Sendwave app promised an instant delivery of funds, or at least within 30 seconds, when in many cases, the transfer took much longer. And in some cases, the app said there would be no fee to transfer money, then charged consumers nonetheless.
“It’s ripe for abuse and it’s ripe for deception,” he said.
Consumer attorney Ira Rheingold, the executive director of the National Association of Consumer Advocates, said the app often targets immigrants or those who speak English as a second language.
“This is targeting immigrants. So, you’re dealing with people who are relatively new to this country. Maybe even less aware of their rights and may not be completely English proficient,” Rheingold said. “What’s interesting about this case is because of the existence of the Electronic Fund Transfer Act, there [are] certain rights that cannot be waived. They tried to limit what their liability was.”
The CFPB also said Sendwave failed to provide consumers with legally required disclosures and receipts while not properly investigating consumer disputes and is ordering Chime to give $1.5 million in refunds and pay a $1.5 million penalty into the CFPB’s victim relief fund.
“We are focused on this market, making sure, the players in the market are abiding by the law,” Favretto said. “If consumers have run into issues in sending international remittances, I would encourage them to submit a complaint to the CFPB.”
In a statement to WTOP, Chime Sendwave said the company has agreed with the CFPB’s consent order.
Chime Inc. d/b/a Sendwave has agreed to a voluntary consent order with the US Consumer Financial Protection Bureau (CFPB), relating to historical issues around customer transaction errors and marketing practices that occurred mostly prior to the 2021 merger.
A fair and positive customer experience is central to Sendwave’s product and services, and it will ensure that the requirements of the consent order are implemented.
Since 2021, Sendwave has made various improvements to the way customers are onboarded, providing better visibility of its remittance services agreements and building more resilient notification systems for customer transactions.
Additionally, since the merger, Sendwave has enhanced its commitment to compliance processes and infrastructure, in order to meet the necessary regulatory standards expected of mobile payment transfer apps.
Sendwave takes its responsibility to customer protection very seriously, working closely with regulatory, financial and consumer protection authorities in the US and beyond. To lay even stronger foundations for the future, Sendwave has increased its focus on safeguarding customers while building a fast, reliable and convenient mobile payments transfer app for its growing customer base in the years to come.
Editor’s Note: This story has been updated from a prior version to include a statement from Chime Sendwave.
