[Federal Register Volume 76, Number 99 (Monday, May 23, 2011)]
[Proposed Rules]
[Pages 29902-29962]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-12019]
[[Page 29901]]
Vol. 76
Monday,
No. 99
May 23, 2011
Part III
Federal Reserve System
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12 CFR Part 205
Electronic Fund Transfers; Proposed Rule
Federal Register / Vol. 76 , No. 99 / Monday, May 23, 2011 / Proposed
Rules
[[Page 29902]]
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FEDERAL RESERVE SYSTEM
12 CFR Part 205
[Regulation E; Docket No. R-1419]
RIN 7100-AD76
Electronic Fund Transfers
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Proposed rule; request for public comment.
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SUMMARY: The Board is proposing to amend Regulation E, which implements
the Electronic Fund Transfer Act, and the official staff commentary to
the regulation, which interprets the requirements of Regulation E. The
proposal contains new protections for consumers who send remittance
transfers to consumers or entities in a foreign country, by providing
consumers with disclosures and error resolution rights. The proposed
amendments implement statutory requirements set forth in the Dodd-Frank
Wall Street Reform and Consumer Protection Act.
DATES: Comments must be received on or before July 22, 2011. All
comment letters will be transferred to the Consumer Financial
Protection Bureau.
ADDRESSES: You may submit comments, identified by Docket No. R-1419 and
RIN 7100-AD76, by any of the following methods:
Agency Web site: http://www.federalreserve.gov. Follow the
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: [email protected]. Include the
docket number in the subject line of the message.
FAX: (202) 452-3819 or (202) 452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons. Accordingly, your
comments will not be edited to remove any identifying or contact
information. Public comments may also be viewed electronically or in
paper form in Room MP-500 of the Board's Martin Building (20th and C
Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Dana Miller, Mandie Aubrey or Samantha
Pelosi, Senior Attorneys, or Vivian Wong, Counsel, Division of Consumer
and Community Affairs, Board of Governors of the Federal Reserve
System, Washington, DC 20551, at (202) 452-2412 or (202) 452-3667. For
users of Telecommunications Device for the Deaf (TDD) only, contact
(202) 263-4869.
SUPPLEMENTARY INFORMATION:
I. Statutory Background
The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) (EFTA or
Act), enacted in 1978, provides a basic framework establishing the
rights, liabilities, and responsibilities of participants in electronic
fund transfer (EFT) systems. The EFTA is implemented by the Board's
Regulation E (12 CFR part 205). Examples of the types of transactions
covered by the EFTA and Regulation E include transfers initiated
through an automated teller machine (ATM), point-of-sale terminal,
automated clearinghouse (ACH), telephone bill-payment plan, or remote
banking service. The Act and regulation provide for the disclosure of
terms and conditions of an EFT service; documentation of EFTs by means
of terminal receipts and periodic statements; limitations on consumer
liability for unauthorized transfers; procedures for error resolution;
and certain rights related to preauthorized EFTs. Further, the Act and
regulation restrict the unsolicited issuance of ATM cards and other
access devices.
The official staff commentary (12 CFR part 205 (Supp. I))
interprets the requirements of Regulation E to facilitate compliance
and provides protection from liability under Sections 916 and 917 of
the EFTA for financial institutions and other persons subject to the
Act who act in conformity with the Board's commentary interpretations.
15 U.S.C. 1693m(d)(1). The commentary is updated periodically to
address significant questions that arise.
On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act) was signed into law.\1\ Section 1073 of
the Dodd-Frank Act adds a new Section 919 to the EFTA to create new
protections for consumers who send remittance transfers to designated
recipients located in a foreign country. The Dodd-Frank Act requires
that remittance transfer providers give senders of remittance transfers
certain disclosures, including information about fees, the applicable
exchange rate, and the amount of currency to be received by the
recipient. In addition, the Dodd-Frank Act provides error resolution
rights for senders of remittance transfers and directs the Board to
promulgate standards for resolving errors and recordkeeping rules.
Finally, the Dodd-Frank Act requires the Board to issue rules regarding
appropriate cancellation and refund policies. Final rules must be
prescribed not later than 18 months after enactment, which is January
21, 2012.\2\
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\1\ Public Law 111-203, 124 Stat. 1376 (2010).
\2\ As discussed below, due to the timing of the statute and
this proposal, the Board anticipates that final rules on remittance
transfers will be issued by the Consumer Financial Protection Bureau
(``Bureau'').
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II. Background
A. General
The term ``remittance transfer'' typically describes a transaction
where a consumer sends funds to a relative or other individual located
in another country, often the consumer's country of origin. Traditional
remittance transfers often consist of consumer-to-consumer payments of
low monetary value.
Information on the volume of remittance transfers varies widely, in
part because of the difficulty in obtaining reliable data regarding the
subject population, and in part because of differences in the scope of
transactions included in estimates. The World Bank estimates that the
total volume of remittance transfers worldwide to developing countries
reached $325 billion in 2010.\3\ The World Bank further estimates that
the United States has the highest volume of remittances, totaling $48.3
billion in 2009.\4\ The U.S. Bureau of Economic Analysis estimates that
cash and in-kind ``personal transfers'' made by foreign-born residents
in the United States to households abroad totaled $37.6 billion in
2009,\5\ while the U.S. Census Bureau estimates that cash ``monetary
transfers'' from U.S. residents to nonresident households totaled
approximately $12 billion in 2008.\6\ The majority of
[[Page 29903]]
remittances from the United States are sent to the Caribbean and Latin
America, and primarily to Mexico.\7\ Significant sums are also sent to
Asia, and to the Philippines in particular.
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\3\ World Bank, Migration and Remittances Factbook 2011 17
(2011). The World Bank includes cash and in-kind transfers, earnings
of temporary workers, and other transfers in its calculations.
\4\ Id. at 15.
\5\ U.S. Bureau of Economic Analysis [BEA], Personal Transfers,
1992:I -2010:I (Dec. 16, 2010). For more on the BEA's methodology,
see Christopher L. Bach, BEA, ``Annual Revision of the U.S.
International Accounts, 1991-2004,'' Surv. Of Current Bus. No. 7
(July 2005) at 64-66.
\6\ Elizabeth M. Grieco, Patricia de la Cruz et al, Who in the
United States Sends and Receives Remittances? An Initial Analysis of
the Monetary Transfer Data from the August 2008 CPS Migration
Supplement, U.S. Census Bureau Working Paper No. 87 (Nov. 2010),
available at: http://www.census.gov/population/www/documentation/twps0087/twps0087.html. The report recognizes the substantial
difference between its estimate and that of the BEA and offers
several possible explanations, but does not come to a conclusion.
\7\ U.S. Gov't Accountability Office, GAO-06-204, International
Remittances: Information on Products, Costs, and Consumer
Disclosures 7 (November 2005) (``GAO Report''); see also Cong.
Budget Office, Migrants' Remittances and Related Economic Flows 7
(Feb. 2011).
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B. Methods for Sending Remittance Transfers
Remittance transfers can be sent in a variety of ways. The primary
methods for sending remittances transfers are discussed below.
Remittance Transfers Through Money Transmitters
Traditionally, consumers send remittance transfers through a money
transmitter \8\ operating through its own store or through an agent,
such as a grocery store or neighborhood convenience store. The
remittance transfer provider may have an exclusive arrangement with the
agent, or may be one of several providers available to consumers
through that agent. Typically, the consumer provides basic identifying
information about himself and the recipient, and pays cash sufficient
to cover the transfer amount and any transfer fees charged by the money
transmitter. The consumer is provided a confirmation code, which the
consumer relays to the recipient. The money transmitter sends an
instruction to a specified payout location or locations in the
recipient's country where the recipient may pick up the transferred
funds, often in local currency, on or after a specified date, upon
presentation of the confirmation code and other identification. These
transfers are generally referred to as cash-to-cash remittances. In
some cases, the consumer can also use other methods of payment for the
transfer, such as a credit or debit card, or can provide a checking or
savings account number from which funds can be debited for the
transfer.
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\8\ Federal law requires money transmitters to register with the
Financial Crimes Enforcement Network of the U.S. Department of the
Treasury. 31 U.S.C. 5330; 31 CFR 103.41. Most states also require
money transmitters to be licensed by the state.
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Although most money transmitters focus on cash-to-cash remittance
transfers, many have also broadened their product offerings, with
respect to both the method for sending and the method for receiving
remittance transfers. A recent survey of remittance transfer providers
operating in Latin America showed that approximately 75% also permit
consumers to send transfers of funds that can be deposited directly
into a recipient's bank account, and about 15% offer Internet-based
transfers.\9\ Several money transmitters permit consumers to send
remittances only via the Internet. Money transmitters may also permit
transfers to be sent through a dedicated telephone at an agent, at a
stand-alone kiosk, or by telephone.
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\9\ Manuel Orozco, Elizabeth Burgess et al, Inter-American
Dialogue, A Scorecard in the Market for Money Transfers: Trends in
Competition in Latin American and the Caribbean 6 (June 18, 2010)
(``Scorecard'').
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In most cases where funds are made available to the recipient in
the local currency, the exchange rate is set when the sender tenders
payment, although some money transmitters offer floating rate products
where the exchange rate is not determined until the recipient picks up
the funds. Funds sent through a money transmitter are generally
available in one to three business days, although faster delivery may
be available for a higher fee.
International Wire Transfers
Consumers may also send remittances through banks and credit
unions. Traditionally, consumers have sent remittances through
financial institutions by international wire transfer. Consumers may
choose to send funds by wire transfer when traditional money
transmitters do not send funds where a recipient is located, or when
consumers feel that depositing funds directly to a recipient's account
provides a more secure method of transmitting funds, particularly when
sending larger amounts. A wire transfer is generally an account-to-
account transaction. Funds are transferred from the consumer's account
into a recipient's account at a foreign financial institution. The two
account-holding financial institutions will not communicate directly if
they do not have a correspondent relationship. Rather, the sending
institution will send funds or a payment instruction to a correspondent
institution, which will then be transmitted to the recipient
institution directly or indirectly through a series of intermediary
institutions. Each wire transfer sent from the sender's financial
institution to the recipient's institution may travel through a
different transmittal route of financial institutions.
Fees for international wire transfers are typically higher than
fees for cash-to-cash transfers. Intermediary institutions along the
transmittal route for international wire transfers may deduct fees from
the amount transferred, which are often referred to as ``lifting
fees.'' The recipient institution may also deduct a fee from the
recipient's account for converting the funds into local currency and
depositing them into the recipient's account. Further, depending on the
number of institutions involved in the transmittal route, it may take
longer for funds to be deposited into the recipient's account via
international wire transfer than is typically the case for transfers
conducted through money transmitters. If the sending institution does
not have a direct relationship with the intermediary or receiving
institutions, it likely does not have knowledge of all fees that might
be imposed on the recipient, or when the funds ultimately will be
deposited into the recipient's account.
Financial institutions also do not always know the exchange rate
that will apply to wire transfers. In some instances, financial
institutions purchase foreign currency at wholesale prices on the
commodities market. Before sending a wire transfer, the institution
will convert U.S. dollars into local currency using an exchange rate it
sets (usually based on the wholesale rate plus a margin), and it thus
can determine the exchange rate applicable to the wire transfer. Other
financial institutions, however, do not purchase foreign currency on
the market, or certain currencies may not be readily available for
purchase on the market. In these circumstances, the sending financial
institution will send a wire transfer in U.S. dollars, and will not set
the exchange rate. In those cases, either the first cross-border
intermediary institution in the recipient's country, or the recipient's
institution, will set the rate. If the sending financial institution
does not have a correspondent relationship with these parties, it
generally will not be able to determine the applicable rate.
International ACH
More recently, financial institutions have begun to offer other
methods for sending remittances, such as through international
automated clearing house (ACH) transactions. In 2001, the Federal
Reserve Banks began offering cross-border ACH services to Canada. In
2003, the United States and Mexico launched the ``Partnership for
Prosperity'' initiative aimed at fostering economic development. One of
the efforts under this initiative was to lower the cost of remittance
transfers from the United States to Mexico. Under this initiative, the
Federal Reserve Banks worked with
[[Page 29904]]
the central bank of Mexico to create an interbank mechanism, later
branded ``Directo a M[eacute]xico,'' to carry out cross-border ACH
transactions between the United States and Mexico. The Directo a
M[eacute]xico service was introduced in 2004, and the Federal Reserve
Banks now offer international ACH services to over 35 countries in
Europe, Canada, and Latin America through agreements with private-
sector or government entities.
In each case, the Federal Reserve and the entity or entities with
which the Federal Reserve has an agreement receive, process, and
distribute ACH payments to financial institutions or recipients within
the respective domestic payment systems.\10\ The Federal Reserve
provides U.S. financial institutions access to its FedGlobal ACH
Payments Service for a small charge. Financial institutions, in turn,
offer the product to their customers for a competitive fee.\11\
Institutions may offer customers account-to-account transfers, or allow
customers to send transfers that may be picked up at a participating
institution or other payout location abroad.\12\ In some instances, the
financial institution will know the exchange rate when the transfer is
requested. In other cases, however, the exchange rate is determined by
the foreign ACH counterpart and applied the next business day when
funds are deposited into the recipient's account or made available to
be picked up.
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\10\ Fed. Reserve Bank Services, FedGlobal[reg] ACH Payments
Service Origination Manual, available at: http://www.frbservices.org/files/serviceofferings/pdf/fedach_global_service_orig_manual.pdf.
\11\ See, e.g., Lenora Suki, Competition and Remittances in
Latin America: Lower Prices and More Efficient Markets, Working
Paper at 27 (Feb. 2007), available at: http://www.oecd.org/dataoecd/31/52/38821426.pdf (``Competition and Remittances'').
\12\ Fed. Reserve Bank Services, FedGlobal ACH Payments,
available at: http://www.frbservices.org/serviceofferings/fedach/fedach_international_ach_payments.html.
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Other Account-Based Methods
Over the last decade, some financial institutions have
independently developed lower-cost remittance transfer products, or
have directly partnered with or joined a larger distribution network of
financial institutions or other payout locations. These products
generally are account-to-account or account-to-cash products that
resemble those offered by traditional money transmitters. Transferred
funds are generally available in one to three days, similar to the
traditional money transmitter model, for a competitive fee.\13\
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\13\ See, e.g., Competition and Remittances at 27; Scorecard at
7.
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Additional Methods
In addition to the primary remittance transfer methods described
above, there are various other methods and products for delivering
funds to a person located abroad. For example, consumers may send funds
to recipients abroad using prepaid cards. In one model, a consumer
purchases a prepaid card from a remittance transfer provider, which
loads funds onto the card and sends it to a specified recipient in
another country. The recipient may then use the prepaid card at an ATM
or at a point of sale. The consumer can reload the recipient's prepaid
card through the provider's Web site. In this model, the exchange rate
is set when the recipient uses the card. Other card-based products
permit the cardholder to send funds using his or her debit or credit
card to the debit or credit card account of a recipient.
A consumer may also add a recipient in another country as an
authorized user on his or her checking or savings account. A debit card
linked to the consumer's account is provided to the recipient, who can
use it to withdraw funds at an ATM or at a point of sale. Remittance
transfer providers are also exploring the use of mobile applications to
send remittances.\14\
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\14\ Consumers may also use informal methods to send money
abroad, such as sending funds through the mail or with a friend,
relative, or courier traveling to the destination country. See,
e.g., Bendixen & Amandi, Survey of Latin American Immigrants in the
United States (2008), available at: http://www.bendixenandassociates.com/studies2008.html (estimating about 12%
of remittances to Latin America are through informal means)
(``Bendixen Survey'').
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C. Consumer Choice, Pricing, and Disclosure
Consumers choose a particular remittance transfer provider or
product over another for a number of reasons. Significant factors
include trust in the provider, security, reliability (i.e., having
funds available at the specified time), and convenience to the
recipient, particularly in markets where the recipient may have limited
options where funds can be picked up.\15\ Fees and exchange rates are
also key factors in choosing a provider. Some studies have shown
consumers may agree to pay more to ensure that recipients receive the
entire amount promised at the promised delivery time, and that
consumers also tend to continue using a service provider once it proves
reliable.\16\
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\15\ Marianne A. Hilgert, Jeanne M. Hogarth, et al. ``Banking on
Remittances: Extending Financial Services to Immigrants.'' 15
Partners No. 2 at 18 (2005); Competition and Remittances at 25. See
also the discussion below regarding the Board's consumer testing.
\16\ GAO Report at 8. See also Appleseed, The Fair Exchange:
Improving the Market for International Remittances 7 (Apr. 2007).
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Studies also suggest that increasing diversification and
competition in the remittance transfer market have contributed to
downward market pressure on prices.\17\ One study shows that transfer
costs to Latin America, the largest recipient of remittances from the
United States, have decreased from about 15% of the value transferred
before 2000 to approximately 5% of the value transferred, although the
rate of decline has slowed in the last few years.\18\ Similarly, the
World Bank estimates that worldwide, transfer costs declined to an
estimated 8.7% of the value of the transfer in first quarter of
2010.\19\
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\17\ Scorecard at 7. Technology is also a driving factor.
\18\ Inter-American Development Bank, Multilateral Investment
Fund. Ten Years of Innovation in Remittances: Lessons Learned and
Models for the Future 8 (2005). The market has recently seen
remittance transfer provider consolidation.
\19\ World Bank Migration and Development Brief No. 13 at 10
(Nov. 2010).
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Although the remittance transfer market has seen an overall price
decline, concerns remain regarding the adequacy of disclosures. Even
though consumers often can obtain exchange rate and fee information
orally upon request, many consumers currently do not receive written
information about their remittance transaction until after payment is
tendered. Consumer advocates have argued that providing written
disclosures prior to payment is essential to help the consumer
understand the transaction before committing to pay.\20\ However, one
survey indicated that a majority of consumers are satisfied with the
transparency of the exchange rate and fees.\21\ Concerns have also been
raised that state money transmitter laws address licensing and money
laundering issues, but largely do not require disclosures.
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\20\ See, e.g., Testimony of Annette LoVoi, Appleseed, in
Hearing Before House Subcomm. on Fin. Insts. And Cons. Credit, No.
111-39 (June 3, 2009).
\21\ Scorecard at 10.
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Further, there is inconsistency in the type of information
disclosed by different providers. In some instances, the provider may
disclose the total cost of the transaction to the sender, but not the
amount the recipient will receive. In other instances, the consumer may
believe that the recipient will receive a specified amount, but lifting
fees, recipient agent fees, or foreign taxes reduce the amount the
recipient
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ultimately receives. Thus, consumers could benefit from consistent,
accessible disclosures regarding remittance transfers. Concerns have
also been raised about a consumer's ability to pursue the resolution of
errors with providers, particularly given variations in state law
regulation of money transmitters.\22\
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\22\ Nat. Council of La Raza, Wiring Change: New Protections for
Remittances Can Help Families, at: http://www.nclr.org/images/uploads/pages/Remittances_and_Banking_Reform_5_5_2010_Final.pdf (May 2010).
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Outreach and Consumer Testing
In the fall of 2010, Board staff conducted outreach with various
parties regarding remittances and implementation of the statute. Board
staff met with representatives from a variety of money transmitters,
financial institutions, industry trade associations, consumer
advocates, and other interested parties to discuss current remittance
transfer business models, consumer disclosure and error resolution
practices, operational issues, and specific provisions of the
statute.\23\
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\23\ Summaries of these meetings are available on the Board's
Web site at: http://www.federalreserve.gov/newsevents/reform_consumer.htm.
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The Board also engaged a testing consultant, ICF Macro (Macro), to
conduct focus groups and one-on-one interviews regarding remittance
transfers. Participants represented a range of ages, education levels,
amount of time lived in the United States, and country or region to
which remittances were sent.
In December 2010, Macro conducted a series of six focus groups with
eight to ten participants each, to explore current remittance provider
practices and attitudes about remittance disclosures. Three focus
groups were held in Bethesda, Maryland, and three were held in Los
Angeles, California. At each location, two of the three focus groups
were conducted in English, and the third in Spanish. Among other
things, participants were asked about the factors they consider when
choosing a remittance provider, and information they receive from
providers before and after their transaction. Consistent with the
research described above, focus group participants identified cost,
convenience, and security among the most important factors when
choosing a provider, and tended to use the same provider over time.
Most participants said they did not receive any written information
before completing an in-person remittance transfer, but said they could
get information about fees and exchange rates orally if they asked an
agent. Only a few participants regularly compared provider prices.
Those who did compare would generally call or look on-line for
approximate fees and exchange rates. When asked about the usefulness of
a storefront sign showing how much a recipient would receive in local
currency if $100 were sent, most participants responded by highlighting
the limitations and obstacles of such a sign.
In early 2011, Macro conducted a series of one-on-one interviews in
New York City, Atlanta, Georgia, and Bethesda, Maryland, with nine to
ten participants in each city. During the interview, participants were
given scenarios in which they completed a hypothetical remittance
transfer and received one or more disclosure forms. For each scenario,
participants were asked specific questions to test their understanding
of the information presented in the disclosure form. Nearly all
participants understood the information presented in the disclosure
forms. Most participants said that getting information prior to
completing the transaction could be useful in that it would give
consumers the opportunity to review or confirm information before
sending money. Participants also generally responded positively to
disclosures about their error resolution rights.
III. Summary of Proposal
The Board is proposing to implement the Dodd-Frank Act remittance
transfer provisions in a new Subpart B of Regulation E, Sec. 205.30 et
seq.\24\ The proposed rule contains new protections for consumers who
send remittance transfers to designated recipients in a foreign country
by providing consumers with disclosures and error resolution rights.
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\24\ Existing provisions of Regulation E would be incorporated
into a new Subpart A.
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Under the proposed rule, a remittance transfer provider must
generally provide a written pre-payment disclosure to a sender \25\
containing information about the specific transfer, such as the
exchange rate, applicable fees and taxes, and the amount to be received
by the designated recipient. Oral pre-payment disclosures would be
permitted if the transaction is conducted entirely by telephone.
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\25\ As discussed in more detail below, the proposed rule is
applicable to senders who are consumers.
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The remittance transfer provider must also generally provide a
written receipt when payment is made for the remittance transfer that
includes the information provided on the pre-payment disclosure, as
well as additional information such as the date of availability, the
recipient's contact information, and information regarding the sender's
error resolution and cancellation rights. Alternatively, the proposed
rule permits remittance transfer providers to provide senders a single
written pre-payment disclosure containing all of the information
required on the receipt.
The proposal also implements two statutory exceptions that permit a
remittance transfer provider to disclose an estimate of the amount of
currency to be received, rather than the actual amount. The first
exception applies for five years from the date of enactment of the
Dodd-Frank Act. This temporary exception applies to insured depository
institutions and insured credit unions that cannot determine certain
disclosed amounts for reasons beyond their control, which primarily
occurs with international wire transfers. The second exception is a
permanent exception and applies where the provider cannot determine
certain amounts to be disclosed because of (a) the laws of a recipient
country or (b) the method by which transactions are made in the
recipient country. Under the proposed rule, the permanent exception
applies when the government of a foreign country sets the exchange rate
after a transfer has been sent, or where the exchange rate, by law, is
not set until the recipient picks up the funds. The permanent exception
also applies to certain international ACH transactions, where the
central bank of the foreign country sets the exchange rate after the
transfer has been sent.
The proposed rule also implements the statutory requirement that
disclosures must generally be provided in English and in each of the
foreign languages principally used by the remittance transfer provider
to advertise, solicit, or market remittance transfer services at a
particular office, with several modifications. The proposed rule
provides guidance on how and when foreign language disclosures must be
provided, and proposes several foreign language disclosure
alternatives.
Additionally, the proposed rule prescribes error resolution
standards, including recordkeeping standards, consistent with the
statute. The proposed rule requires a sender to provide notice of an
error to the remittance transfer provider within 180 days of the stated
date of availability of a remittance transfer. The notice triggers a
provider's duty to investigate the claim and correct any error within
90 days of receiving the notice of error. The proposed rule would
establish error resolution procedures similar to those
[[Page 29906]]
that apply to a financial institution under Regulation E with respect
to errors involving electronic fund transfers. The proposal also
provides senders specified cancellation and refund rights.
Finally, the proposed rule sets forth two alternative approaches
for implementing the standards of liability for remittance transfer
providers, including those that act through an agent. Under the first
alternative, a remittance transfer provider would be liable for
violations by an agent, when such agent acts for the provider. Under
the second alternative, a remittance transfer provider would be liable
for violations by an agent acting for the provider unless the provider
establishes and maintains policies and procedures for agent compliance,
including appropriate oversight measures, and the provider corrects any
violation, to the extent appropriate.
Request for Comment
The Board requests comment on all aspects of this remittances
proposal, including on the various alternatives set forth in the
proposal, as well as projected implementation and compliance costs. The
Board also solicits comment on whether an effective date of one year
from the date the final rule is published, or an alternative effective
date, would be appropriate. Specifically, the Board requests comment on
the length of time remittance transfer providers may need to implement
the rule.
Transition Issues
The Dodd-Frank Act requires the Board to issue rules implementing
the remittance transfer provisions within 18 months from the date of
enactment, or by January 21, 2012. However, the Act transfers
rulemaking authority for most consumer protection statutes, including
the EFTA, from the Board to the Bureau as of the designated transfer
date, which has been designated as July 21, 2011.\26\ As a result, the
Board anticipates that final rules on remittance transfers will be
issued by the Bureau.
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\26\ 75 FR 57252 (Sept. 20, 2010).
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IV. Legal Authority
Section 1073 of the Dodd-Frank Act creates a new Section 919 of the
EFTA and requires remittance transfer providers to make disclosures to
senders of remittance transfers, pursuant to rules prescribed by the
Board. In particular, providers must give senders a written pre-payment
disclosure containing specified information applicable to the sender's
remittance transfer. The remittance transfer provider must also provide
a written receipt that includes the information provided on the pre-
payment disclosure, as well as additional specified information. EFTA
Section 919(a); 15 U.S.C. 1693o-1(a).
In addition, EFTA Section 919 provides for specific error
resolution procedures. The Act directs the Board to promulgate error
resolution standards and rules regarding appropriate cancellation and
refund policies. EFTA Section 919(d); 15 U.S.C. 1693o-1(d). Finally,
EFTA Section 919 requires the Board to establish standards of liability
for remittance transfer providers, including those that act through
agents. EFTA Section 919(f); 15 U.S.C. 1693o-1(f). Except as described
below, the remittance transfer rule is proposed under the authority
provided to the Board in EFTA Section 919, and as more specifically
described in this SUPPLEMENTARY INFORMATION.
In addition to the statutory mandates set forth in the Dodd-Frank
Act, EFTA Section 904(a) authorizes the Board to prescribe regulations
necessary to carry out the purposes of the title. The express purposes
of the EFTA, as amended by the Dodd-Frank Act, are to establish ``the
rights, liabilities, and responsibilities of participants in electronic
fund and remittance transfer systems'' and to provide ``individual
consumer rights.'' EFTA Section 902(b); 15 U.S.C. 1693. As described in
more detail in the SUPPLEMENTARY INFORMATION, the following provisions
are proposed in part or in whole pursuant to the Board's authority in
EFTA Section 904(a): Sec. Sec. 205.31(b)(1)(i), (b)(1)(iii),
(b)(1)(v), (b)(1)(vi), (g)(2), and 205.33(c)(1). The proposed Model
Forms in Appendix A are also proposed pursuant to EFTA Section 904(a).
The Section-by-Section analysis, Initial Regulatory Flexibility
Analysis, and Paperwork Reduction Act analysis serve as the economic
impact analysis pursuant to EFTA Section 904(a)(2).
EFTA Section 904(c) further provides that regulations prescribed by
the Board may contain any classifications, differentiations, or other
provisions, and may provide for such adjustments or exceptions for any
class of electronic fund transfers or remittance transfers that the
Board deems necessary or proper to effectuate the purposes of the
title, to prevent circumvention or evasion, or to facilitate
compliance. As described in more detail in the SUPPLEMENTARY
INFORMATION, proposed Sec. Sec. 205.31(g)(1)(ii), (g)(2), (g)(3),
205.32(a), and 205.31(e)(2) are proposed in part or in whole pursuant
to the Board's authority in EFTA Section 904(c).
V. Section-by-Section Analysis
Section 205.3 Coverage
Section 205.3(a), which describes Regulation E's coverage, is
proposed to be revised to provide that the requirements of Subpart B
apply to remittance transfer providers. The revision reflects that the
scope of the Dodd-Frank Act's remittance transfer provisions is not
limited to financial institutions. Specifically, EFTA Section 919(g)(3)
defines a remittance transfer provider as ``any person that provides
remittance transfers for a consumer in the normal course of its
business, whether or not the consumer holds an account with such
person'' (emphasis added). Thus, Subpart B would also apply to non-
financial institutions, such as money transmitters, that send
remittance transfers.
Section 205.30 Remittance Transfer Definitions
EFTA Section 919(g) sets forth several definitions applicable to
the remittance transfer provisions in Subpart B. Proposed Sec. 205.30
incorporates these definitions, with modifications, and other terms
used in the rule, with proposed commentary for further clarification.
30(a) Agent
Proposed Sec. 205.30(a) states that an ``agent'' means an agent,
authorized delegate, or person affiliated with a remittance transfer
provider under state or other applicable law, when such agent,
authorized delegate, or affiliate acts for that remittance transfer
provider. EFTA Section 919 does not use consistent terminology
concerning agents of remittance transfer providers. For example, EFTA
Section 919(f)(1) uses the phrase ``agent, authorized delegate, or
person affiliated with a remittance transfer provider,'' when that
person ``acts for that remittance transfer provider,'' while other
provisions use the phrase ``agent or authorized delegate'' (EFTA
Section 919(f)(2)) or simply ``agent'' (EFTA Section 919(b)). The Board
does not believe that these statutory wording differences are intended
to establish different standards across the rule. Therefore, the
proposed rule generally refers to ``agents,'' as defined in proposed
Sec. 205.30(a), to provide consistency across the proposed rule.
Because the concept of agency is historically tied to state law, the
proposed definition references these parties under state or other
applicable law.
[[Page 29907]]
30(b) Business Day
Several provisions in the proposed rule use the term ``business
day.'' See, e.g., Sec. Sec. 205.31(e)(2) and 205.33(c)(1). The
existing definition of ``business day'' in Regulation E applies only to
financial institutions and includes inapt commentary. See 12 CFR
205.2(d). Because remittance transfer providers include non-financial
institutions, proposed Sec. 205.30(b) contains a new definition of
``business day'' applicable to Subpart B. The proposed rule states that
``business day'' means any day on which a remittance transfer provider
accepts funds for sending remittance transfers.
Proposed comment 30(b)-1 explains that a business day includes the
entire 24-hour period ending at midnight, and that a notice required by
any section in Subpart B is effective even if given outside of normal
business hours. However, the comment clarifies that no section of
Subpart B requires that a remittance transfer provider make telephone
lines available on a 24-hour basis.
30(c) Designated Recipient
EFTA Section 919(g)(1) provides that a ``designated recipient'' is
``any person located in a foreign country and identified by the sender
as the authorized recipient of a remittance transfer to be made by a
remittance transfer provider, except that a designated recipient shall
not be deemed to be a consumer for purposes of [the EFTA].'' The
statute uses the term ``person,'' indicating that the statute applies
to remittance transfers sent to businesses, as well as to consumers.
See proposed comment 30(c)-1.
Proposed Sec. 205.30(c) implements EFTA Section 919(g)(1), with
edits for clarity. A remittance transfer provider will generally only
know the location where funds are to be sent, rather than where a
designated recipient is physically located. For instance, although the
sender may indicate that funds are to be sent to the recipient in
Mexico City, the recipient could actually be in the United States at
the time of the transfer. The Board believes that the statutory
reference to a ``person located in a foreign country'' should be read
with a view to the location where funds are to be sent. Additionally,
the statute references a remittance transfer ``to be made by a
remittance transfer provider.'' As discussed below, the definition of
remittance transfer requires that it be sent by a remittance transfer
provider. Thus, this language is unnecessary. Accordingly, proposed
Sec. 205.30(c) states that a designated recipient is any person
specified by the sender as an authorized recipient of a remittance
transfer to be received at a location in a foreign country.
Proposed comment 30(c)-2 explains that a remittance transfer is
received at a location in a foreign country if funds are to be received
at a location physically outside of any state, as defined in Sec.
205.2(l). The Board understands that a provider will generally know the
location where funds can be picked up or will be deposited as part of
its normal operating procedures. However, the Board solicits comment on
whether there are instances where a remittance provider may only
receive a recipient's email address and therefore be unable to
determine the location where funds are to be received.
30(d) Remittance Transfer
30(d)(1) General Definition
EFTA Section 919(g)(2)(A) defines a remittance transfer as an
electronic (as defined in Section 106(2) of the Electronic Signatures
in Global and National Commerce Act, 15 U.S.C. 7007 et seq. (``E-Sign
Act'')) transfer of funds requested by a sender located in any state to
a designated recipient that is sent by a remittance transfer provider.
Under the statute, such a transaction is a remittance transfer whether
or not the sender holds an account with the remittance transfer
provider and whether or not the remittance transfer is also an
electronic fund transfer, as defined in EFTA Section 903. The statute
thus brings within the scope of the EFTA certain transactions that have
traditionally been outside the scope of the EFTA, if those transactions
meet elements of the definition of ``remittance transfer.'' Such
transactions include cash-based remittance transfers sent through a
money transmitter as well as consumer wire transfers. Proposed Sec.
205.30(d) implements the definition of ``remittance transfer'' in EFTA
Section 919(g)(2), with revisions for clarity. The Board is also
proposing commentary to provide further guidance on the definition, as
well as examples of transactions that are and are not remittance
transfers under the rule.
Proposed Sec. 205.30(d)(1) implements the general definition set
forth in EFTA Section 919(g)(2)(A). Proposed Sec. 205.30(d)(1) states
that a remittance transfer means the electronic transfer of funds
requested by a sender to a designated recipient that is sent by a
remittance transfer provider. Proposed Sec. 205.30(d)(1) further
states that the term applies regardless of whether the sender holds an
account with the remittance transfer provider and regardless of whether
the transfer is also an electronic fund transfer, as defined in Sec.
205.3(b).
Proposed comments 30(d)-1 through -4 provide further guidance on
each of the elements of the proposed definition of ``remittance
transfer.'' Proposed comment 30(d)-1 provides that there must be an
electronic transfer of funds. The term electronic has the meaning given
in Section 106(2) of the E-Sign Act. There may be an electronic
transfer of funds if a provider makes an electronic book entry between
different settlement accounts to effectuate the transfer. However, the
proposed comment explains that where a sender mails funds directly to a
recipient, or provides funds to a courier for delivery to a foreign
country, there has not been an electronic transfer of funds. Therefore,
non-electronic remittance methods are not remittance transfers.
Proposed comment 30(d)-2 provides that the definition of remittance
transfer requires a specific sender request that a remittance transfer
provider send a remittance transfer. The proposed comment explains that
a deposit by a consumer into a checking or savings account does not
itself constitute such a request, even if a person in a foreign country
is an authorized user on that account, where the consumer retains the
ability to withdraw funds in the account.
Proposed comment 30(d)-3 provides that the definition of remittance
transfer also requires that the transfer be sent to a designated
recipient. As noted above, the definition of ``designated recipient''
requires a person to be identified by the sender as the authorized
recipient of a remittance transfer to be sent by a remittance transfer
provider. Proposed comment 30(d)-3 explains that there is no designated
recipient unless the sender specifically identifies the recipient of a
transfer. Thus, there is a designated recipient if, for example, the
sender instructs a remittance transfer provider to send a prepaid card
to a specified recipient in a foreign country, and the sender does not
retain the ability to draw down funds on the prepaid card. In contrast,
there is no designated recipient where the sender retains the ability
to withdraw funds, such as when a person in a foreign country is made
an authorized user on the sender's checking account, because the
remittance transfer provider cannot identify the ultimate recipient of
the funds. For instance, a consumer may add his daughter, who is
studying abroad, as an authorized user to his account so that the
daughter has access to funds while abroad. When the consumer deposits
funds to the account,
[[Page 29908]]
the consumer's financial institution cannot know whether the purpose of
that deposit is to provide funds to the daughter, or is merely a
deposit that the consumer will later withdraw himself.
Finally, proposed comment 30(d)-4 provides that the definition of
remittance transfer requires that the remittance transfer must be sent
by a remittance transfer provider. The proposed comment explains that
this means that there must be an intermediary actively involved in
sending the transfer of funds. Examples include a person (other than
the sender) sending an instruction to a receiving agent in a foreign
country to make funds available to a recipient; executing a payment
order pursuant to a consumer's instructions; executing a consumer's
online bill payment request; or otherwise engaging in the business of
accepting or debiting funds for transmission to a recipient and
transmitting those funds.
However, the proposed comment explains that a payment card network
or other third party payment service that is functionally similar to a
payment card network does not send a remittance transfer when a
consumer designates a debit or credit card as the payment method to
purchase goods or services from a foreign merchant. In such a case, the
payment card network or third party payment service is not directly
engaged with the sender to send a transfer of funds to a person in a
foreign country; rather, the network or third party payment service is
merely providing contemporaneous third-party payment processing and
settlement services on behalf of the merchant or the remittance
transfer provider, rather than on behalf of the sender.\27\
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\27\ However, when a consumer uses his or her debit or credit
card to send funds to a recipient's debit or credit card, the debit
or credit card issuer offering the service could be considered a
remittance transfer provider, and the transfer of funds a remittance
transfer, under the proposed rule. See, e.g., proposed comment
30(d)-5.
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Similarly, where a consumer provides a checking or other account
number directly to a merchant as payment for goods or services, the
merchant is not acting as a remittance transfer provider when it
submits the payment information for processing. Proposed comment 30(d)-
5 provides a non-exclusive list of examples of transactions that are,
and are not, remittance transfers.
Under proposed Sec. 205.30(d), some transactions that have not
traditionally been considered remittance transfers, such as a
consumer's online bill payment through his or her financial institution
to a recipient abroad, will fall within the scope of the rule. In
contrast, other transfer methods specifically marketed for use by a
consumer to send remittances, but that do not meet all elements of the
definition of remittance transfer, may fall outside the scope of the
rule (e.g., a prepaid card where the sender retains the ability to draw
down funds). The Board believes that proposed Sec. 205.30(d)
implements the statutory definition of ``remittance transfer.''
However, the Board solicits comment on whether it should exempt online
bill payments made through the sender's institution, and specifically
preauthorized bill payments, from the rule, as it could be challenging
for institutions to provide timely disclosures.
30(d)(2) Exception for Small-Value Transfers
EFTA Section 919(g)(2)(B) states that a remittance transfer does
not include a transfer described in EFTA Section 919(g)(2)(A) ``in an
amount that is equal to or lesser than the amount of a small-value
transaction determined, by rule, to be excluded from the requirements
under section 906(a)'' of the EFTA. EFTA Section 906(a) addresses the
requirements for electronic terminal receipts. The Board has previously
determined, by rule, that financial institutions are not subject to the
requirement to provide electronic terminal receipts for small-value
transfers of $15 or less. 12 CFR Sec. 205.9(e). Proposed Sec.
205.30(d)(3) incorporates this exception for small-value transfers by
providing that remittance transfers do not include transfer amounts of
$15 or less.
Application of the EFTA; Relationship to Uniform Commercial Code
As described above, the statute applies to remittance transfers
whether or not they are electronic fund transfers. This raises certain
issues with respect to traditional cash-based remittance transfers sent
through money transmitters, which have not generally been regulated
under the EFTA, as well as international wire transfers, which are not
EFTs.
During the Board's outreach, some money transmitters asked how and
to what extent the EFTA would apply to providers that would ordinarily
be outside its scope. The statute outlines the application of the EFTA
to remittance transfers that are not electronic fund transfers.
Specifically, EFTA Section 919(e)(1) states that a remittance transfer
that is not an electronic fund transfer is not subject to any of the
provisions of EFTA Sections 905 through 913. For example, a money
transmitter sending a remittance transfer would not be subject to the
requirement in EFTA Section 906(b), as implemented in 12 CFR 205.9(b),
to provide periodic statements to consumers. The transmitter would,
however, generally be subject to other provisions of the EFTA,
including provisions on liability under EFTA Sections 916 through 918.
EFTA Section 919(e)(2)(A) also clarifies that a transaction that would
not otherwise be an electronic fund transfer under the EFTA, such as a
wire transfer, does not become an electronic fund transfer because it
is a remittance transfer under EFTA Section 919.
Prior to the enactment of the Dodd-Frank Act, wire transfers were
entirely exempt from the EFTA and instead were governed by state law
through state enactment of Article 4A of the Uniform Commercial Code.
Among other things, Article 4A primarily governs the rights and
responsibilities among the commercial parties to a wire transfer,
including payment obligations among the parties and allocation of risk
of loss for unauthorized or improperly executed payment orders.
UCC Article 4A-108 provides that Article 4A does not apply ``to a
funds transfer, any part of which is governed by the [EFTA]'' (emphasis
added). Under EFTA Section 919, wire transfers sent on a consumer's
behalf that are remittance transfers will now be governed in part by
the EFTA. As a result, it appears that, by operation of Article 4A-108,
Article 4A will no longer apply to such consumer wire transfers.\28\
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\28\ Commercial wire transfers are not affected because a
``sender'' must be a consumer.
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Some institutions have urged the Board to clarify that remittance
transfers are not governed by the EFTA for purposes of state law, so
that UCC Article 4A will continue to apply to such transfers. However,
as noted above, EFTA Section 919(e)(1) explicitly applies the EFTA to
remittance transfers that are not electronic fund transfers, except for
certain enumerated provisions. Further, the remittance disclosure and
error resolution requirements are set forth under the EFTA.
In the alternative, institutions have urged the Board to preempt
any provision of state law that prevents a remittance transfer from
being treated as a funds transfer under UCC Article 4A based solely
upon the inclusion of the remittance transfer provisions in EFTA
Section 919. Under this suggested approach, the error resolution
provisions of EFTA Section 919(b)(1) would govern remittance transfers
as
[[Page 29909]]
between a sender and a remittance transfer provider, but the remaining
provisions in UCC Article 4A would continue to govern the allocation of
risk of loss as between the remittance transfer provider and another
financial institution that carries out part of the transfer.
Under EFTA Section 921 and Sec. 205.12, the Board may determine
whether a state law relating to, among other things, electronic fund
transfers is preempted by a provision of the EFTA or Regulation E.
However, a provision can only preempt a state law that is inconsistent
with the provision and only to the extent of its inconsistency.
Moreover, the statute and regulation provide that a state law is not
inconsistent with any provision if it is more protective of consumers.
EFTA Section 902(b) states that the primary purpose of the EFTA is
the provision of individual consumer rights. In contrast, as discussed
above, Article 4A is primarily intended to govern the rights and
responsibilities among the commercial parties to a funds transfer, that
is, the financial institution that accepts a payment order for a funds
transfer and any other financial institutions that may be involved in
carrying out the transfer. Thus, because the two statutes focus on
different relationships, it is not clear that EFTA Section 919 is
inconsistent with UCC Article 4A.
In addition, the Board notes that Congress amended the EFTA's
preemption provision to specifically include a reference to state gift
card laws when it enacted new EFTA protections for gift cards as part
of the Credit Card Accountability Responsibility and Disclosure Act of
2009 (Credit Card Act).\29\ By contrast, Congress did not amend the
EFTA's preemption provision with respect to state laws relating to
remittance transfers, including those that are not electronic fund
transfers, when it enacted the Dodd-Frank Act.
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\29\ See Credit Card Act Sec. 402, Public Law 111-24, 123 Stat.
1734 (2009).
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The Board recognizes that one consequence of covering remittance
transfers under the EFTA could be legal uncertainty for certain
remittance transfer providers. Specifically, providers of international
wire transfers may no longer be able to rely on UCC Article 4A's rules
governing the rights and responsibilities among the parties to a wire
transfer. However, because this issue arises from a provision of state
law, not federal law, the Board believes that the authority for
resolving this uncertainty rests with the states or through the rules
applicable to the relevant wire transfer system. The final rule must be
issued in final form no later than January 21, 2012, and will be
effective at a subsequent date. Thus, before the rule is finalized and
becomes effective, states have the opportunity to amend UCC Article 4A
to restore its application to consumer international wire transfers, or
wire transfer systems could amend their operating rules to incorporate
UCC Article 4A.
30(e) Remittance Transfer Provider
Proposed Sec. 205.30(e) implements the definition of ``remittance
transfer provider'' in EFTA Section 919(g)(3). Proposed Sec. 205.30(e)
states that a remittance transfer provider (or provider) means any
person that provides remittance transfers for a consumer in the normal
course of its business, regardless of whether the consumer holds an
account with such person. To eliminate redundancy, statutory references
to ``any person or financial institution'' have been revised to state
``any person'' in the proposed rule, because the term ``person'' under
Regulation E already includes financial institutions. Proposed comment
30(e)-1 clarifies that an agent is not deemed to be a remittance
transfer provider by merely providing remittance transfer services on
behalf of the remittance transfer provider. The Board solicits comment
on whether it should adopt guidance interpreting the phrase ``normal
course of business'' as sending a minimum number of remittance
transfers in a given year. If so, the Board solicits comment on what
that number should be.
30(f) Sender
Proposed Sec. 205.30(f) implements the definition of ``sender'' in
EFTA Section 919(g)(4) with minor edits for clarity. Under the proposed
rule, a sender is a consumer in a state who requests a remittance
transfer provider to send a remittance transfer to a designated
recipient. Accordingly, the proposed rule does not apply to business-
to-consumer or business-to-business transactions.
Section 205.31 Disclosures
The Dodd-Frank Act contains several disclosure requirements
relating to remittance transfers. Among these, EFTA Sections
919(a)(2)(A) and (B) require a remittance transfer provider to provide
two disclosures to a sender in connection with a remittance transfer.
First, a remittance transfer provider must provide a written pre-
payment disclosure to a sender with information about the sender's
remittance transfer, such as the exchange rate, fees, and the amount to
be received by the designated recipient. A remittance transfer provider
must also provide a written receipt that includes the information
provided on the pre-payment disclosure, as well as additional
information, such as the promised date of delivery, contact information
for the designated recipient, and information regarding the sender's
error resolution rights. EFTA Section 919(a)(5) provides the Board with
certain exemption authority, including the authority to permit a
remittance transfer provider to provide, in lieu of a pre-payment
disclosure and receipt, a single written disclosure to a sender prior
to payment for the remittance transfer that accurately discloses all of
the information required on both the pre-payment disclosure and the
receipt. See EFTA Section 919(a)(5)(C). EFTA Section 919(b) also
provides that disclosures under Section 919 must be made in English and
in each foreign language principally used by the remittance transfer
provider, or any of its agents, to advertise, solicit, or market,
either orally or in writing, at that office.
Proposed Sec. 205.31(a) sets forth the requirements for the
general form of disclosures required under Subpart B. Proposed
Sec. Sec. 205.31(b)(1) and (2) implement the EFTA Section 919(a)(2)(A)
and (B) pre-payment disclosure and receipt requirements. Proposed Sec.
205.31(b)(3) sets forth the requirements for providing a combined
disclosure, as permitted by EFTA Section 919(a)(5)(C). Proposed Sec.
205.31(b)(4) sets forth disclosure requirements with respect to a
sender's error resolution and cancellation rights. Proposed Sec.
205.31(c) sets forth specific format requirements required under
Subpart B, including grouping, proximity, prominence and size, and
segregation requirements. Proposed Sec. 205.31(d) sets forth the
disclosure requirements for providing estimates, to the extent they are
permitted by Sec. 205.32. Proposed Sec. 205.31(e) implements the
timing requirements of EFTA Sections 919(a)(2) and 919(a)(5)(C).
Proposed Sec. 205.31(f) clarifies that the disclosures required by
Sec. 205.31(b) must be accurate when payment is made. Finally,
proposed Sec. 205.31(g) implements the foreign language requirement in
EFTA Section 919(b).
31(a) General Form of Disclosures
31(a)(1) Clear and Conspicuous
Proposed Sec. 205.31(a) sets forth the requirements for the
general form of disclosures required under proposed
[[Page 29910]]
Subpart B. Pursuant to EFTA Sections 919(a)(3)(A) and (a)(5)(C),\30\
proposed Sec. 205.31(a)(1) provides that disclosures required by
Subpart B must be clear and conspicuous. These include the disclosures
required by proposed Sec. 205.31, as well as disclosures providing a
description of the sender's error resolution and cancellation rights
under proposed Sec. Sec. 205.33 and .34, discussed below. Proposed
comment 31(a)(1)-1 clarifies that disclosures are clear and conspicuous
for purposes of Subpart B if they are readily understandable and, in
the case of written and electronic disclosures, the location and type
size are readily noticeable to senders. Oral disclosures, to the extent
permitted by proposed Sec. 205.31(a)(3) and (4), are clear and
conspicuous when they are given at a volume and speed sufficient for a
sender to hear and comprehend them.
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\30\ EFTA Section 919(a)(5)(C) incorporates the requirements of
EFTA Section 919(a)(3)(A) by reference, including the clear and
conspicuous requirement.
---------------------------------------------------------------------------
Proposed Sec. 205.31(a)(1) also provides that disclosures required
by Subpart B may contain commonly accepted or readily understandable
abbreviations or symbols. Proposed comment 31(a)(1)-2 clarifies that
using abbreviations or symbols such as ``USD'' to indicate currency in
U.S. dollars or ``MXN'' to indicate currency in Mexican pesos is
permissible.
31(a)(2) Written and Electronic Disclosures
Proposed Sec. 205.31(a)(2) sets forth the requirements for written
and electronic disclosures under Subpart B. Disclosures required by
Subpart B generally must be provided to the sender in writing. See EFTA
Sections 919(a)(2), (a)(5)(C), and (d)(1)(B)(iv). However, EFTA Section
919(a)(5)(D) permits a remittance transfer provider to disclose a pre-
payment disclosure electronically if a sender initiates a transaction
electronically. The Board believes the intent of this exemption was to
permit a remittance transfer provider to give electronic disclosures
when a sender electronically requests the provider to send the
remittance transfer. See also comment 31(e)-1. Therefore, pursuant to
the Board's authority in EFTA Section 919(a)(5)(D), proposed Sec.
205.31(a)(2) permits a pre-payment disclosure under Sec. 205.31(b)(1)
to be provided to the sender in electronic form, if the sender
electronically requests the remittance transfer provider to send a
remittance transfer. In such a case, proposed comment 31(a)(2)-1
explains that electronic disclosures required by Sec. 205.31(b)(1) may
be provided without regard to the consumer consent and other applicable
provisions of the E-Sign Act. Proposed comment 31(a)(2)-1 also
clarifies that if a sender electronically requests the remittance
transfer provider to send a remittance transfer, receipts required by
Sec. 205.31(b)(2) also may be provided to the consumer in electronic
form. However, electronic receipts must comply with the consumer
consent and other applicable provisions of the E-Sign Act.
Proposed comment 31(a)(2)-2 clarifies that written disclosures may
be provided on any size paper, as long as the disclosures are clear and
conspicuous. For example, disclosures may be provided on a register
receipt or on an 8.5 inch by 11 inch sheet of paper, consistent with
current practices in the industry. The Board believes that the required
disclosures are sufficiently simple and limited in scope that they may
be provided clearly and conspicuously on various paper sizes, as long
as a remittance transfer provider complies with the formatting
requirements of proposed Sec. 205.31(a) and (c).
In addition, proposed Sec. 205.31(a)(2) provides that the written
and electronic disclosures required by Subpart B must be made in a
retainable form, pursuant to EFTA Section 919(a)(2) and consistent with
the authority provided to the Board in EFTA Section 919(a)(5)(C).
Proposed comment 31(a)(2)-3 clarifies that a remittance transfer
provider may satisfy the requirement to provide electronic disclosures
in a retainable form if it provides an on-line disclosure in a format
that is capable of being printed. Electronic disclosures cannot be
provided through a hyperlink or in another manner by which the sender
can bypass the disclosure. A provider is not required to confirm that
the sender has read the electronic disclosures.
The Board requests comment on how the requirement to provide
electronic disclosures in a retainable form in proposed Sec.
205.31(a)(2) could be applied to transactions conducted via text
messaging or mobile phone application.
31(a)(3) Oral Disclosures for Telephone Transactions
Relying upon the exemption authority in EFTA Sec. 919(a)(5)(B),
proposed Sec. 205.31(a)(3) permits pre-payment disclosures required by
Sec. 205.31(b)(1) to be disclosed orally if the transaction is
conducted entirely by telephone and if the remittance transfer provider
complies with the foreign language disclosure requirements of Sec.
205.31(g)(2), discussed below. Proposed comment 31(a)(3)-1 clarifies
that, for transactions conducted partially by telephone, disclosures
may not be provided orally. For example, a sender may begin a
remittance transfer at a remittance transfer provider's dedicated phone
in a retail store, and then provide payment in person to a store clerk
to complete the transaction. In such cases, the proposed comment
clarifies that all disclosures must be provided in writing. The Board
believes that by limiting oral disclosures to transactions performed
entirely by telephone, Congress did not intend to permit providers to
satisfy the disclosure requirements orally for transactions conducted
partially by telephone. See EFTA Section 919(a)(5)(B). Proposed comment
31(a)(3)-1 clarifies that for such a transaction, a provider complies
with the disclosure requirements, for example, by providing the written
pre-payment disclosure in person prior to the sender's payment for the
transaction, and the written receipt when payment is made for the
remittance transfer.
31(a)(4) Oral Disclosures for Certain Error Resolution Notices
Proposed Sec. 205.31(a)(4) permits the report of the results of an
investigation of a notice of error required by proposed Sec.
205.33(c)(1) to be provided orally, if the remittance transfer provider
determines that an error occurred as described by the sender, and if
the remittance transfer provider complies with the foreign language
disclosure requirements of Sec. 205.31(g)(2), discussed below. As
discussed in Sec. 205.33, below, the Board believes that it is
appropriate to permit a remittance transfer provider to orally report
its findings that the specified error did occur, alert the sender of
the results of the investigation, and facilitate a sender's ability to
remedy errors promptly.
In outreach conducted by the Board, some remittance transfer
providers suggested that the Board should permit a disclosure made
prior to payment to be provided at the point-of-sale either orally or
electronically by showing a consumer a computer screen displaying the
required disclosures. Alternatively, some remittance transfer providers
suggested permitting a disclosure made prior to payment to be provided
only upon request of the sender. The providers argued that requiring
written disclosures prior to payment would be less convenient and more
confusing for
[[Page 29911]]
consumers, and would create an unnecessary compliance burden.
For point-of-sale transactions, the proposed rule does not permit
the pre-payment disclosure required by Sec. 205.31(b)(1) or the
combined disclosure required by Sec. 205.31(b)(3), discussed below, to
be provided orally or to be shown to a consumer on a computer screen at
the point-of-sale prior to payment. As discussed above, EFTA Section
919 requires disclosures to be written and retainable, and only permits
oral disclosures in limited circumstances. Therefore, the Board
believes that the statute does not permit a remittance transfer
provider to provide an oral pre-payment disclosure at the point-of-
sale.
Moreover, the statute requires disclosures under EFTA Section 919
to be provided to senders, and not simply made available. Showing a
sender the required disclosures on a computer screen at the point-of-
sale or providing a written disclosure only upon request of the sender
would not comply with the requirement to provide the disclosures to the
sender. Therefore, the Board believes that permitting these disclosures
to be made available, rather than be provided to a sender, would be
inconsistent with the statute.
31(b) Disclosures
Section 205.31(b) sets forth substantive disclosure requirements
for remittance transfers. EFTA Sections 919(a)(2)(A) and (B) require a
remittance transfer provider to provide to a sender: (1) A written pre-
payment disclosure with information applicable to the sender's
remittance transfer--specifically, the exchange rate, the amount of
transfer and other fees, and the amount that would be received by the
designated recipient; and (2) a written receipt that includes the
information provided on the pre-payment disclosure, plus the promised
date of delivery, contact information for the designated recipient,
information regarding the sender's error resolution rights, and contact
information for the remittance transfer provider and applicable
regulatory agencies. EFTA Section 919(a)(5)(C) also authorizes the
Board to permit a remittance transfer provider to provide a single
written disclosure to a sender, instead of a pre-payment disclosure and
receipt, that accurately discloses all of the information required on
both the pre-payment disclosure and the receipt (a ``combined
disclosure'').
Pursuant to EFTA Section 919(a)(2), information on a pre-payment
disclosure and a receipt need only be provided to the extent applicable
to the transaction. Similarly, the information required on a combined
disclosure need only be provided as applicable because the combined
disclosure is simply a consolidation of disclosures on the pre-payment
disclosure and the receipt. See EFTA Section 919(a)(2)(A) and (B).
Proposed comment 31(b)-1 clarifies that a remittance transfer provider
could choose to omit an inapplicable item provided in Sec. 205.31(b).
Alternatively, a remittance transfer provider could disclose a term and
state that an amount or item is ``not applicable,'' ``N/A,'' or
``None.''
For example, if fees or taxes are not imposed in connection with a
particular transaction, the provider need not provide the disclosures
required by Sec. 205.31(b)(1)(ii) or (b)(1)(vi). Similarly, a Web site
need not be disclosed under Sec. 205.31(b)(2)(v) if the provider does
not maintain a Web site.
In some instances, a sender may choose to send funds to a
designated recipient to be picked up in U.S. dollars or deposited into
a dollar-denominated account. For example, El Salvador is a dollarized
economy,\31\ so remittance transfers to El Salvador may be sent as
dollar-to-dollar transactions. Proposed comment 31(b)-1 clarifies that
a provider need not provide the exchange rate disclosure required by
Sec. 205.31(b)(1)(iv) if a recipient receives currency in U.S. dollars
or currency is delivered into an account in U.S. dollars, rather than
in another currency.
---------------------------------------------------------------------------
\31\ See U.S. Department of State Consular Information Sheet for
El Salvador at http://travel.state.gov/travel/cis_pa_tw/cis/cis_1109.html.
---------------------------------------------------------------------------
Section 205.31(b) requires that disclosures be described using the
terms set forth in Sec. 205.31(b) or substantially similar terms. The
Board developed and tested the terms in consumer testing to ensure that
consumers could understand the information disclosed to them. However,
the proposed rule provides remittance transfer providers with some
flexibility in developing their disclosures. Proposed comment 31(b)-2
clarifies that terms may be more specific than the terms provided in
the proposed rule. For example, a remittance transfer provider sending
funds to Colombia may describe a tax disclosed under Sec.
205.31(b)(1)(vi) as a ``Colombian Tax'' in lieu of describing it as
``Other Taxes.''
As discussed in Sec. 205.31(g) below, disclosures generally must
be provided in English and in each of the foreign languages principally
used by the remittance transfer provider to advertise, solicit, or
market remittance transfers, either orally or in writing, at that
office. The Board recognizes that not all words or phrases lend
themselves to exact word-for-word translations in a foreign language.
Therefore, proposed comment 31(b)-2 also clarifies that foreign
language disclosures required under Sec. 205.31(g) must contain
accurate translations of the terms, language, and notices required by
Sec. 205.31(b).
31(b)(1) Pre-Payment Disclosures
Pursuant to EFTA Section 919(a)(2)(A), proposed Sec. 205.31(b)(1)
requires a remittance transfer provider to make specified pre-payment
disclosures to a sender, as applicable. Proposed Sec. 205.31(b)(1)(i)
requires that the remittance transfer provider disclose the amount that
will be transferred to the designated recipient using the term
``Transfer Amount'' or a substantially similar term. The transfer
amount must be provided in the currency in which the funds will be
transferred. For example, if the funds will be transferred from U.S.
dollars to Mexican pesos, the transfer amount required by Sec.
205.31(b)(1) must be disclosed in U.S. dollars. The Board is proposing
the disclosure of the transfer amount pursuant to the Board's authority
under EFTA Section 904(a). The Board believes the disclosure of the
transfer amount helps demonstrate to a sender how a provider calculates
the total amount of the transaction, discussed below.
Proposed Sec. 205.31(b)(1)(ii) requires that a remittance transfer
provider disclose any fees and taxes that are imposed on the remittance
transfer by the remittance transfer provider, in the currency in which
the funds will be transferred. The proposed disclosure must be
described using the term ``Transfer Fees,'' ``Transfer Taxes,'' or
``Transfer Fees and Taxes,'' or a substantially similar term. These
disclosures are proposed pursuant to EFTA Section 919(a)(2)(A)(ii),
which requires a remittance transfer provider to disclose the amount of
transfer fees and any other fees charged by the remittance transfer
provider for the remittance transfer. The Board believes the statute
requires the disclosure of all charges that would affect the cost of a
remittance transfer to the sender, including any applicable taxes that
are passed on to the sender. See proposed comment 31(b)(1)-1.
Proposed comment 31(b)(1)-1 clarifies that taxes imposed by the
remittance transfer provider include taxes imposed on the remittance
transfer by a state or other governmental body. The proposed comment
further clarifies that a remittance transfer provider need only
disclose fees or taxes required by Sec. Sec. 205.31(b)(1)(ii) and
(b)(1)(vi), as
[[Page 29912]]
applicable. For example, if no transfer taxes are imposed on a
remittance transfer, a provider only needs to disclose applicable
transfer fees. If both fees and taxes are imposed, the fees and taxes
may be disclosed as one disclosure or as separate, itemized
disclosures.
Proposed comment 31(b)(1)-1 distinguishes between the fees and
taxes required to be disclosed in proposed Sec. 205.31(b)(1)(ii) and
those in proposed Sec. 205.31(b)(1)(vi). The fees and taxes required
to be disclosed by Sec. 205.31(b)(1)(ii) include all fees and taxes
imposed on the remittance transfer by the provider. For example, a
provider must disclose a service fee and any state taxes imposed on the
remittance transfer. By contrast, as discussed below, the fees and
taxes required to be disclosed by Sec. 205.31(b)(1)(vi) include fees
and taxes imposed on the remittance transfer by a person other than the
provider.
Proposed comment 31(b)(1)-1 also clarifies that the terms used to
describe the fees and taxes in proposed Sec. Sec. 205.31(b)(1)(ii) and
(b)(1)(vi) must differentiate between such fees and taxes. For example,
the terms used to describe the fees for proposed Sec. Sec.
205.31(b)(1)(ii) and (b)(1)(vi) may not both be described as ``Fees.''
The Board requests comment on whether a provider should be permitted to
describe the disclosures in proposed Sec. 205.31(b)(1)(ii) or
(b)(1)(vi) using the term ``Fees and Taxes'' or a substantially similar
term if either only fees or only taxes are being charged, or if a
provider should be required to describe the amounts being disclosed
more specifically using the term ``Fees'' or ``Taxes'' or a
substantially similar term.
Proposed Sec. 205.31(b)(1)(iii) requires disclosure of the total
amount of the transaction, which is the sum of Sec. Sec.
205.31(b)(1)(i) and (b)(1)(ii) in the currency in which the funds will
be transferred. The total amount of the transaction would be required
to be described using the term ``Total'' or a substantially similar
term. Although this total is not required by the statute, the Board
believes that it is appropriate to include it in the proposed pre-
payment disclosure, so that a sender can understand the total amount to
be paid out-of-pocket for the transaction. Some consumer testing
participants stated that they would use such a disclosure to ensure
that they had the funds necessary to complete the transaction on hand.
Therefore, the Board proposes to require the disclosure of the total
amount of the transaction pursuant to its authority under EFTA Section
904(a).
Proposed Sec. 205.31(b)(1)(iv) requires the disclosure of any
exchange rate used by the provider for the remittance transfer, rounded
to the nearest 1/100th of a decimal point, consistent with EFTA Section
919(a)(2)(A)(iii). The exchange rate would be required to be described
using the term ``Exchange Rate'' or a substantially similar term. The
proposed rule does not require the disclosure of either the wholesale
rate or the spread between the wholesale rate and the exchange rate
offered by the provider.
Several outreach participants urged the Board to propose a rule
that would permit remittance transfer providers to continue offering
``floating rate'' remittance transfers. A floating rate remittance
transfer is a transfer requested by a sender for which the exchange
rate is set when the designated recipient claims the funds. When making
a floating rate transfer, the remittance transfer provider does not set
or disclose a foreign exchange rate to the sender. It was suggested
that the Board permit a remittance transfer provider making a floating
rate transfer to disclose terms such as ``unknown,'' ``floating,''
``variable,'' or ``to be determined,'' instead of a specified exchange
rate.
However, the statute requires a remittance transfer provider to
disclose to the sender the exchange rate to be used for the remittance
transfer to the sender both before and at the time the sender pays for
the transaction. This disclosure provides senders with certainty
regarding the exchange rate and the amount of currency their designated
recipients would receive.
Proposed comment 31(b)(1)(iv)-1 clarifies that if the designated
recipient will receive funds in a currency other than the currency in
which it will be transferred, a remittance transfer provider must
disclose an exchange rate. An exchange rate that is estimated must be
disclosed pursuant to the requirements of Sec. 205.32. A remittance
transfer provider may not disclose, for example, that an estimated
exchange rate is ``unknown,'' ``floating,'' or ``to be determined.''
The Board recognizes that the result of proposed Sec. 205.31(b)(1)(iv)
would likely be that providers will no longer offer floating rate
products.
Proposed comment 31(b)(1)(iv)-2 clarifies that the exchange rate
used by the provider for the remittance transfer must be rounded to the
nearest 1/100th of a decimal point. However, an exchange rate need not
be expressed to the nearest 1/100th of a decimal point if the amount
need not be rounded. For example, if one U.S. dollar exchanges for
11.9483 Mexican pesos, a provider must disclose that the U.S. dollar
exchanges for 11.95 Mexican pesos. However, if one U.S. dollar
exchanges for 11.9 Mexican pesos, the provider may disclose that ``US$1
= 11.9 MXN,'' instead of ``11.90MXN.''
Proposed Sec. 205.31(b)(1)(v) requires the disclosure of the
transfer amount in Sec. 205.31(b)(1)(i), in the currency in which the
funds will be received by the designated recipient, but only if fees or
taxes are imposed under proposed Sec. 205.31(b)(1)(vi). The disclosure
must be described using the term ``Transfer Amount'' or a substantially
similar term. As discussed above, a remittance transfer provider is
always required to disclose the transfer amount, pursuant to proposed
Sec. 205.31(b)(1)(i). The proposal would require a remittance transfer
provider to repeat the disclosure of the amount transferred, expressed
in the currency in which the funds will be received by the designated
recipient, if other fees and taxes are charged under proposed Sec.
205.31(b)(1)(vi). As is the case with the transfer amount required to
be disclosed by proposed Sec. 205.31(b)(1)(i), the transfer amount
required to be disclosed by proposed Sec. 205.31(b)(1)(v) is proposed
pursuant to the Board's authority under EFTA Section 904(a).
This disclosure is only required to the extent fees and taxes are
imposed by parties other than the remittance transfer provider. When
disclosed with such fees and taxes, the Board believes the disclosure
of the transfer amount will help demonstrate to the sender how a
provider calculates the amount that will ultimately be received by a
designated recipient. For example, a sender could request to send $100
to Nigeria. Assuming an exchange rate of 1 U.S. dollar = 150.00
Nigerian naira, and assuming the recipient is charged an additional fee
of 100 naira, the amount to be received would be 14,900 naira. By
disclosing the transfer amount as 15,000 naira, and the fee as 100
naira, a sender will better understand why the recipient will receive
only 14,900 naira in spite of the exchange rate. However, when the
amount to be received is not reduced by any third party fees or taxes,
the transfer amount under Sec. 205.31(b)(1)(v) and the amount to be
received will be the same number, so the disclosure under Sec.
205.31(b)(1)(v) is unnecessary.
The proposed commentary provides more guidance on this requirement.
Proposed comment 31(b)(1)-2 clarifies that two transfer amounts are
required to be disclosed by Sec. Sec. 205.31(b)(1)(i) and (b)(1)(v).
First, a provider must disclose the transfer amount in the currency in
which the funds will be transferred to show the calculation of the
total amount of the transaction. Typically, funds will
[[Page 29913]]
be transferred in U.S. dollars, so the transfer amount would be
expressed in U.S. dollars. However, if funds will be transferred, for
example, from a Euro-denominated account, the transfer amount would be
expressed in Euros.
Second, a provider must disclose the transfer amount in the
currency in which the funds will be made available to the designated
recipient. For example, if the funds will be picked up by the
designated recipient in Japanese yen, the transfer amount would be
expressed in Japanese yen. However, as discussed above, the proposed
comment also clarifies that this second transfer amount need not be
disclosed if fees and taxes are not imposed for the remittance transfer
under proposed Sec. 205.31(b)(1)(vi). In such cases, there is no
consumer benefit to the additional information if the transferred
amount is not reduced by other fees and taxes.
Finally, proposed Sec. 205.31(b)(1)(v) also requires a remittance
transfer provider to use the term ``Transfer Amount'' or a
substantially similar term to describe the disclosure required under
this paragraph. Proposed comment 31(b)(1)-2 clarifies that the terms
used to describe each transfer amount should be the same.
Proposed Sec. 205.31(b)(1)(vi) requires a remittance transfer
provider to disclose any fees and taxes imposed on the remittance
transfer by a person other than the provider, in the currency in which
the funds will be received by the designated recipient. Such fees and
taxes could include lifting fees charged in connection with an
international wire transfer, a fee charged by a recipient institution
or agent, or a tax imposed by a government in the designated
recipient's country. In contrast to fees and taxes paid by the sender
to the remittance transfer provider, which are added to the total
amount paid by the sender, these fees and taxes typically reduce the
amount received by the designated recipient. In many cases, the sender
may not be aware of the impact of these fees and taxes. The Board
believes that it is critical for senders to be aware of all fees and
taxes charged in connection with the transfer, even if not imposed by
the remittance transfer provider, because such fees and taxes affect
the amount ultimately received by the designated recipient. Therefore,
the Board is proposing the disclosure of other fees and taxes pursuant
to its authority under EFTA Section 904(a).
The remittance transfer provider would be required to describe the
disclosures using the term ``Other Transfer Fees,'' ``Other Transfer
Taxes,'' or ``Other Transfer Fees and Taxes,'' or a substantially
similar term. As discussed above, proposed comment 31(b)(1)-1 clarifies
that the fees and taxes required to be disclosed by proposed Sec.
205.31(b)(1)(vi) must include all fees and taxes that are charged for
the remittance transfer by a person other than the remittance transfer
provider. For example, a provider would disclose fees imposed by the
receiving institution or agency at pick-up, fees imposed by
intermediary institutions in connection with an international wire
transfer, and taxes imposed by a foreign government.
Proposed comment 31(b)(1)(vi)-1 clarifies that Sec.
205.31(b)(1)(vi) requires the disclosure of fees and taxes in the
currency in which the funds will be received by the designated
recipient. A fee or tax required by Sec. 205.31(b)(1)(vi) may be
imposed in one currency, but the funds may be received by the
designated recipient in another currency. In such cases, the remittance
transfer provider should calculate the fee or tax to be disclosed using
the exchange rate required by Sec. 205.31(b)(1)(iv). For example, an
intermediary institution in an international wire transfer may impose a
fee in U.S. dollars, but funds are ultimately deposited in the
recipient's account in Euros. Here, the provider would disclose the fee
to the sender expressed in Euros, calculated using the exchange rate
used by the provider for the remittance transfer. This is intended to
facilitate the sender's understanding of the calculation of the amount
to be received.
Proposed Sec. 205.31(b)(1)(vii) requires a remittance transfer
provider to disclose to the sender the amount that will be received by
the designated recipient, in the currency in which the funds will be
received. See EFTA Section 919(a)(2)(A)(i). The disclosures should be
described using the term ``Total to Recipient'' or a substantially
similar term. EFTA Section 919(a)(2)(A)(i) requires a remittance
transfer provider to disclose the amount received by the designated
recipient using the values of the currency into which the funds will be
exchanged. As discussed above, the Board believes that the amount to be
received by the designated recipient is intended to be the amount net
of all fees and taxes that would affect the amount received by the
designated recipient. An exchange rate, if one is applied, is just one
of the factors that could affect the actual amount received by the
designated recipient. Providing a total amount to be received that does
not take into account all cost elements would not be consistent with
the statute's goal of providing disclosures of the costs of a
remittance transfer.
Proposed comment 31(b)(1)(vii)-1 clarifies that the disclosed
amount to be received by the designated recipient must reflect all
charges that affect the amount received, including the exchange rate
and all fees and taxes imposed by the remittance transfer provider, the
receiving institution, and any other party in the transmittal route of
a remittance transfer. The disclosed amount received must be reduced by
the amount of any fee or tax that is imposed by a person other than the
provider, even if that amount is imposed or itemized separately from
the transaction amount.
31(b)(2) Receipt
Proposed Sec. 205.31(b)(2) requires a remittance transfer provider
to disclose a written receipt to a sender when payment is made for the
remittance transfer. As with the proposed pre-payment disclosure, the
disclosures required to be provided on the receipt may be provided as
applicable. Proposed Sec. 205.31(b)(2)(i) requires the same
disclosures required in the pre-payment disclosure to be disclosed on
the receipt, pursuant to EFTA Section 919(a)(2)(B)(i)(I). Proposed
Sec. 205.31(b)(2) also requires disclosure of additional elements on
the receipt.
Proposed Sec. 205.31(b)(2)(ii) requires a remittance transfer
provider to disclose the date of availability of funds to the
designated recipient, using the term ``Date Available'' or a
substantially similar term. EFTA Section 919(a)(2)(B)(i)(II) requires
the disclosure of the promised date of delivery to the designated
recipient on a receipt. While a transfer may be made available to a
designated recipient within a specified time frame at a specified pick-
up location, the recipient may not pick up the funds for some period of
time. The Board interprets the statute to require disclosure of the
date the currency will be available to the designated recipient, not on
the date the funds are physically picked up by the designated
recipient. Time zone differences may result in a date in the United
States being different from the date in the country of the designated
recipient. Thus, proposed comment 31(b)(2)-1 clarifies that the date of
availability that must be disclosed is the date in the foreign country
on which the funds will be available to the designated recipient.
In some instances, it may be difficult to determine the exact date
on which a remittance transfer will be available to a designated
recipient. For example, an international wire transfer may pass through
several intermediary institutions prior to becoming available at the
institution of a designated
[[Page 29914]]
recipient, and the time it takes to pass through these intermediaries
may be difficult to determine. Nonetheless, EFTA Section
919(a)(2)(B)(i)(II) requires disclosure of a single, promised date of
delivery of the funds. EFTA Section 919 does not permit a remittance
transfer provider to provide an estimate of this promised date.
Therefore, proposed comment 31(b)(2)-1 clarifies that a remittance
transfer provider may not provide a range of dates that the remittance
transfer may be available, nor an estimate of the date on which funds
will be available.
As a result, remittance transfer providers will likely disclose the
latest date that the funds will be available, even if funds are
available sooner most of the time. The Board believes it is appropriate
for a remittance transfer provider to indicate that funds may be
available sooner than the disclosed date. Thus, proposed Sec.
205.31(b)(2)(ii) permits a provider to include a statement that funds
may be available to the designated recipient earlier than the date
disclosed, using the term ``may be available sooner'' or a
substantially similar term. For example, if funds may be available on
January 3, but are not certain to be available until January 10, then
January 10 should be disclosed as the date of availability. However,
the provider may disclose ``January 10 (may be available sooner).'' See
proposed comment 31(b)(2)-1.
The Board tested various terms in consumer testing for
communicating the fact that funds may be available earlier than the
date disclosed. Participants generally understood the meaning of the
statement that funds ``may be available sooner'' better than other
terms.
Proposed Sec. 205.31(b)(2)(iii) implements EFTA Section
919(a)(2)(B)(i)(III) by requiring a remittance transfer provider to
disclose the name and, if provided by the sender, the telephone number
and/or address of the designated recipient. The proposed rule would
require the remittance transfer provider to describe the disclosure
using the term ``Recipient'' or a substantially similar term.
As discussed in more detail below, EFTA Section 919(d) provides the
sender with substantive error resolution and cancellation rights. EFTA
Section 919(a)(2)(B)(ii)(I) requires a remittance transfer provider to
provide a statement containing information about the rights of the
sender regarding the resolution of errors on the receipt or combined
disclosure. However, the Board recognizes that a long disclosure
routinely provided to the sender may be ineffective at conveying the
most important information that a sender would need to resolve an error
or cancel a transaction. At the same time, the Board believes a sender
must have access to a complete description of the sender's error
resolution and cancellation rights in order to effectively exercise
those rights. Together, proposed Sec. Sec. 205.31(b)(2)(iv) and Sec.
205.31(b)(4), discussed below, attempt to balance the interest in
providing a sender a concise disclosure with the sender's ability to
obtain a full explanation of those rights.
Specifically, proposed Sec. 205.31(b)(2)(iv) would require a
remittance transfer provider to include an abbreviated statement about
the sender's error resolution and cancellation rights on the receipt
and on the combined disclosures using language set forth in Model Form
A-37 of Appendix A or substantially similar language. The statement
requires a brief disclosure of the sender's error resolution and
cancellation rights, and includes a notification that a sender may
contact the remittance transfer provider for a written explanation of
these rights. Consumer testing participants understood and responded
positively to the concise, abbreviated disclosure.
EFTA Section 919(a)(2)(B)(ii)(II) generally requires that the
remittance transfer provider disclose appropriate contact information
for the remittance transfer provider, its state regulator, and the
Board. The Board believes that appropriate contact information includes
the name, telephone number, and Web site of these entities, so that
senders have multiple options for addressing any issues that may arise
with respect to a remittance transfer provider.
Therefore, proposed Sec. 205.31(b)(2)(v) requires the disclosure
of the name, telephone number, and Web site of the remittance transfer
provider. Proposed Sec. 205.31(b)(2)(vi) requires a statement that the
sender can contact the state agency that regulates the remittance
transfer provider and the Bureau for questions or complaints about the
remittance transfer provider, using language set forth in Model Form A-
37 of Appendix A or substantially similar language. The statement must
include contact information for these agencies, including the toll-free
telephone number of the Bureau established under section 1013 of the
Consumer Financial Protection Act of 2010. The proposed paragraph
requires the disclosure of the Bureau, rather than the Board, because
the Bureau will be the appropriate contact when the rules are issued in
final form after the designated transfer date. Consumer testing
participants understood the brief disclosure of the contact
information, and many stated that they would call one or more of the
entities to resolve any problems that the provider did not resolve.
The Board requests comment on whether and how a remittance transfer
provider should be required to disclose information regarding a state
agency that regulates the remittance transfer provider for remittance
transfers conducted through a toll-free telephone number or on-line
and, if so, what is the appropriate state agency to disclose to a
sender. For example, it may be appropriate to require disclosure of the
state agency that regulates the remittance transfer provider in the
state in which the sender is located.
The Board also requests comment on whether it is appropriate to
disclose the contact information for the Bureau, including the toll-
free telephone number, in cases where the Bureau is not the primary
Federal regulator for consumer complaints against the remittance
transfer provider. For example, under the proposed rule, the contact
information of the Bureau would be disclosed to a sender who uses a
financial institution to send an international wire transfer. The
sender may encounter an error and, based on the disclosure, contact the
Bureau for assistance with error resolution. However, the Bureau may
not have the authority to investigate such complaints against the
financial institution. Therefore, the Board requests comment on whether
it is appropriate to require the disclosure of the contact information
of the Bureau in all circumstances. The Board further requests comment
on whether it is appropriate to instead require the contact information
of the appropriate Federal regulator of the remittance transfer
provider for consumer complaints.
Finally, the Board requests comment on whether financial
institutions that are primarily regulated by federal banking agencies,
such as national banks, should be required to disclose state regulatory
agency information. The Board requests comment regarding the
circumstances in which it might be appropriate to disclose such a state
regulatory agency.
31(b)(3) Combined Disclosure
As discussed above, EFTA Section 919(A)(5)(C) grants the Board
authority to permit a remittance transfer provider to provide to a
sender a single written disclosure instead of the pre-payment
disclosure and receipt, if the information disclosed is accurate at the
time at which payment is made in connection with the remittance
transfer.
[[Page 29915]]
The disclosure must include the content provided in the disclosures
under EFTA Sections 919(a)(2)(A) and (B).
The Board believes it is appropriate to provide the combined
disclosure as a compliance option to give flexibility to remittance
transfer providers. The Board determined through consumer testing that
participants understood the disclosures provided on the combined
disclosure. Moreover, approximately half of the consumers stated that
they would prefer to receive the single, combined disclosure rather
than the pre-payment disclosure and receipt. Therefore, proposed Sec.
205.31(b)(3) generally permits a remittance transfer provider to
provide the disclosures described in proposed Sec. Sec. 205.31(b)(1)
and (b)(2) in a single disclosure prior to payment, as applicable, as
an alternative to providing the two disclosures described in proposed
Sec. Sec. 205.31(b)(1) and (b)(2).
Some participants who stated they would prefer to receive a pre-
payment disclosure and a receipt expressed concern about receiving the
combined disclosure without also receiving proof of payment for the
remittance transfer. Particularly if an issue arose with the
transaction, these participants felt that they would not have
sufficient official documentation to assert an error with the provider.
Some participants also expressed concerns about different methods for
providing proof of payment with the combined disclosure. For example,
some participants believed that stamping the combined disclosure as
``paid'' constituted sufficient proof of payment, while others believed
that it was insufficient because a disclosure could easily be
fraudulently stamped as ``paid.'' The Board solicits comment on whether
proof of payment should also be required for remittance transfer
providers using the combined disclosure and, if so, solicits comment on
appropriate methods of demonstrating proof of payment for the combined
disclosure.
31(b)(4) Long Form Error Resolution and Cancellation Notice
As discussed above, the Board believes a sender must have access to
a complete description of the sender's error resolution and
cancellation rights, in addition to an abbreviated statement about the
sender's error resolution and cancellation rights on the receipt and
combined disclosures required by proposed Sec. 205.31(b)(2)(iv). The
Board believes that a sender should have access to a full description
of his or her rights in order to effectively exercise those rights.
Therefore, proposed Sec. 205.31(b)(4) provides that, upon the sender's
request, a remittance transfer provider must provide to the sender a
notice providing a description of the sender's error resolution and
cancellation rights under Sec. Sec. 205.33 and .34 using Model Form A-
36 of Appendix A or a substantially similar notice.
31(c) Specific Format Requirements
Proposed Sec. 205.31(c) sets forth specific format requirements
for the written and electronic disclosures required by this section.
The Board's consumer testing indicated that grouping certain
disclosures together or in close proximity to one another helped
consumers with calculations and facilitated their comprehension of the
disclosures, including fees and costs. Therefore, proposed Sec. Sec.
205.31(c)(1) and (2) set forth grouping and proximity requirements for
certain disclosures required under Sec. 205.31. Proposed Sec.
205.31(c)(3) sets forth prominence and size requirements for
disclosures required by Subpart B, and proposed Sec. 205.31(c)(4)
imposes segregation requirements for disclosures provided under Subpart
B, with certain specified exceptions.
31(c)(1) Grouping
Proposed Sec. 205.31(c)(1) provides that the disclosures required
by proposed Sec. Sec. 205.31(b)(1)(i), (ii), and (iii) (transfer
amount, transfer fees and taxes, and total amount of transaction) must
be grouped together. Grouping these disclosures together would make
clear to the sender that the total amount charged is comprised of the
transfer amount plus any transfer fees and taxes. Proposed Sec.
205.31(c)(1) also provides that the disclosures required by proposed
Sec. Sec. 205.31(b)(1)(v), (vi), and (vii) (transfer amount in the
currency to be made available to the designated recipient, other
transfer fees and taxes, and amount received by the designated
recipient) must be grouped together. Grouping these disclosures
together would make clear to the sender how the total amount to be
transferred to the designated recipient, in the currency to be made
available to the designated recipient, will be reduced by fees or taxes
charged by a person other than the remittance transfer provider.
Proposed comment 31(c)(1)-1 clarifies that information is grouped
together for purposes of Subpart B if multiple disclosures are in close
proximity to one another and a sender can reasonably determine how to
calculate the total amount of the transaction, and the amount that will
be received by the designated recipient. Proposed Model Forms A-30
through A-35 in Appendix A, discussed in more detail below, illustrate
how information may be grouped to comply with the rule. The proposed
comment also clarifies that a remittance transfer provider may group
the information in another manner. For example, a provider could
provide the grouped information as a horizontal, rather than a
vertical, calculation.
31(c)(2) Proximity
Proposed Sec. 205.31(c)(2) provides that the exchange rate
required by Sec. 205.31(b)(1)(iv) must be disclosed in close proximity
to the other disclosures on the pre-payment disclosure. The Board
believes that disclosing the exchange rate in close proximity to both
the calculations that demonstrate the total transaction amount, as well
as the total amount the recipient will receive, will help a sender
understand the effect of the exchange rate on the transaction.
Proposed Sec. 205.31(c)(2) also provides that the error resolution
and cancellation disclosures required by Sec. 205.31(b)(2)(iv) must be
disclosed in close proximity to the other disclosures on the receipt.
The Board determined in consumer testing that providing a brief
statement regarding error resolution and cancellation rights in a
location that is near the other disclosures effectively communicated
these rights to a consumer. Most participants in consumer testing
noticed the error resolution statement and liked its brevity and
proximity to the other disclosure elements. Therefore, the Board
believes that the error resolution and cancellation disclosures should
be closely proximate to the other disclosures required under Sec.
205.31(b)(2) to prevent such disclosures from being overlooked by a
sender.
The Board believes that many remittance transfer providers
currently could comply with the proposed grouping and proximity
requirements for written and electronic disclosures. However, as
remittance transfer products continue to evolve, providing key
disclosures about the terms of a remittance transfer may present new
challenges. For example, remittance transfers may, in the future,
increasingly be sent from the U.S. via text messaging or mobile phone
applications. Therefore, the Board requests comment on how the grouping
and proximity requirements in proposed Sec. Sec. 205.31(c)(1) and (2)
could be applied to transactions conducted via text messaging or mobile
phone application.
31(c)(3) Prominence and Size
Proposed Sec. 205.31(c)(3) sets forth the requirements regarding
the prominence
[[Page 29916]]
and size of the disclosures required under Subpart B. The proposed rule
provides that written and electronic disclosures required by Subpart B
must be made in a minimum eight-point font. The disclosures that the
Board developed for consumer testing used eight-point font, consistent
with the font size used in a register receipt, and were provided on the
front of the page shown to consumer testing participants. Participants
in consumer testing generally found that the disclosures were readable,
and they were able to locate the different disclosure elements during
testing. The Board believes that disclosures provided in a smaller font
could diminish the readability and noticeability of the disclosures.
The Board solicits comment on whether a minimum font size should be
required and, if so, whether an eight-point font size is appropriate.
Proposed Sec. 205.31(c)(3) further provides that written
disclosures required by Subpart B must be on the front of the page on
which the disclosure is printed. In testing, participants reacted
positively to front-of-page disclosures. Proposed Sec. 205.31(c)(3)
also provides that each of the written and electronic disclosures
required under Sec. 205.31(b) must be in equal prominence to each
other. Participants in consumer testing generally responded positively
to the model forms, and particularly to the statement regarding error
resolution and cancellation, which was displayed in the same font and
type size as the other disclosures. For example, some participants
specifically contrasted the disclosures to error resolution or
cancellation disclosures currently provided by remittance transfer
providers that they stated were typically provided in ``fine print'' or
on the back of this disclosure. Given the importance of each of the new
disclosures in Subpart B, and particularly the new error resolution and
cancellation rights, the Board believes that each of the disclosures
should be provided in equal prominence to each other.
The Board requests comment on how the prominence and size
requirements in proposed Sec. 205.31(c)(3) could be applied to
transactions performed via text messaging or mobile phone application.
31(c)(4) Segregation
Proposed Sec. 205.31(c)(4) provides that written and electronic
disclosures required by Subpart B must be segregated from everything
else and must contain only information that is directly related to the
disclosures required under Subpart B. Proposed comment 31(c)(4)-1
clarifies that disclosures may be segregated from other information in
a variety of ways. For example, the disclosures may appear on a
separate sheet of paper or may be set off from other information on a
notice by outlining them in a box or series of boxes, bold print
dividing lines, or a different color background.
Proposed comment 31(c)(4)-2 clarifies that, for purposes of
segregation, the following information is directly related information:
(i) The date and/or time of the transaction; (ii) the sender's name and
contact information; (iii) the location at which the designated
recipient may pick up the funds; (iv) the confirmation or other
identification code; (v) a company name or logo; (vi) an indication
that a disclosure is or is not a receipt or other indicia of proof of
payment; (vii) a designated area for signatures or initials; and (viii)
a statement that funds may be available sooner, as permitted by Sec.
205.31(b)(2)(ii).
In general, the Board believes that permitting additional
information to be included on the disclosure could adversely affect the
comprehensibility of the disclosures. Nonetheless, the Board recognizes
that certain information not required by the statute or regulation is
integral to the transaction, such as the confirmation code that a
designated recipient must tender in order to receive the funds, and a
remittance transfer provider should be able to communicate this
information to a consumer. The Board tested the required disclosures in
a segregated format that complies with the requirements of proposed
Sec. 205.31(c)(4) and that included most of the additional information
discussed above. The Board's testing indicated that the additional
information permitted by paragraph (c)(4) was useful to the consumer
and did not lead to information overload. Thus, the proposed rule would
permit, but would not require, such additional information to be
included with the required, segregated disclosures. The Board requests
comment on the proposed segregation requirement and whether additional
information should be permitted to be included with the required
segregated disclosures.
The Board recognizes that the specific formatting requirements set
forth in proposed Sec. 205.31(c) are more prescriptive than other
disclosures under Regulation E. The Board believes that certain
formatting requirements are necessary in order to ensure that consumers
notice and understand the disclosures provided under Subpart B. Many of
the disclosures required by Subpart B have a mathematical relationship
to each other, and presenting this information to consumers in a
logical sequence is important for consumer understanding. The Board
requests comment, however, on whether certain requirements set forth in
proposed Sec. 205.31(c) could be less prescriptive, while still
ensuring that consumers are provided with clear and conspicuous
disclosures.
31(d) Estimates
Proposed Sec. 205.31(d) provides that estimated disclosures may be
provided to the extent permitted by Sec. 205.32. See Sec. 205.32,
below. The proposed rule would require that such disclosures be
described as estimates, using the term ``Estimated'' or a substantially
similar term and in close proximity to the estimated term or terms
described. Consumer testing participants generally understood that
where the term ``estimated'' was used in close proximity to the
estimated term or terms, the actual amount could vary (for example, the
amount of currency to be received could be higher or lower than the
amount disclosed). Proposed comment 31(d)-1 provides examples of terms
that may be used to indicate that a disclosed amount is estimated. For
instance, a remittance transfer provider could describe an estimated
disclosure as ``Estimated Transfer Amount,'' ``Other Estimated Fees and
Taxes,'' or ``Total to Recipient (Est.).''
31(e) Timing
Proposed Sec. 205.31(e) sets forth the timing requirements for the
disclosures required by Sec. 205.31 in accordance with the statute.
Proposed Sec. 205.31(e)(1) provides that the disclosures required by
Sec. 205.31(b)(1) or a combined disclosure provided under Sec.
205.31(b)(3) must be provided to the sender when the sender requests
the remittance transfer, but prior to payment for the remittance
transfer.
Although current practice generally is to provide written
disclosures after payment is made, the Board believes that the statute
precludes such an approach with respect to the combined disclosures.
Specifically, EFTA Section 919(a)(5)(C) affirmatively requires that the
combined disclosure be accurate at the time at which payment is made
(emphasis added). Such a requirement would be superfluous if the
combined disclosure could be provided after payment, because a
disclosure provided after payment should accurately reflect the terms
of the completed transaction. Therefore, the Board believes the statute
requires that the combined disclosure be given prior to payment.
[[Page 29917]]
Proposed comment 31(e)-1 clarifies that whether a sender has
requested a remittance transfer depends on the facts and circumstances.
Under the proposed comment, a sender that asks a provider to send a
remittance transfer, and that provides transaction-specific information
to the provider in order to send funds to a designated recipient, has
requested a remittance transfer. For example, a sender who asks the
provider to send money to a recipient in Mexico and provides the sender
and recipient information to the provider has requested the remittance
transfer provider to send a remittance transfer. In contrast, a sender
who solely inquires about that day's rates and fees has not requested
the remittance transfer provider to send a remittance transfer.
EFTA Section 919(a)(2)(B) requires that a receipt be provided to a
sender at the time at which the sender makes payment in connection with
the remittance transfer. The Board believes the statute intends to
permit a sender to provide a receipt after the sender pays for a
transaction. However, the Board also believes that the statute
generally intends the receipt to be provided within a short time period
of when the sender pays for the transaction. Therefore, proposed Sec.
205.31(e)(2) provides that a receipt provided under Sec. 205.31(b)(2)
must be provided to the sender when payment is made for the
transaction. Proposed comment 31(e)-2 provides examples of when a
remittance transfer provider may provide the sender a receipt. For
example, a provider could give the sender a receipt after the consumer
pays for the remittance transfer, but before the sender leaves the
counter. A provider could also give the sender a receipt immediately
before the sender pays for the transaction.
Proposed Sec. 205.31(e)(2) further states that if a transaction is
conducted entirely by telephone, a written receipt may be mailed or
delivered to the sender no later than one business day after the date
on which payment is made for the remittance transfer. If a transaction
is conducted entirely by telephone and involves the transfer of funds
from the sender's account held by the provider, the written receipt may
be provided on or with the next regularly scheduled periodic statement.
See EFTA Section 919(a)(5)(B). In some circumstances, a provider
conducting such a transfer from the sender's account held by the
provider is not required to provide a periodic statement. The Board
believes that in such circumstances, it is appropriate to permit the
provider to provide a written receipt within a similar period of time
as a periodic statement. Therefore, the Board is also proposing in
Sec. 205.31(e)(2) that the written receipt may be provided within 30
days after payment is made for the remittance transfer if a periodic
statement is not required, pursuant to its authority under EFTA Section
904(c). In order for the written receipt to be mailed or delivered to a
sender conducting a transaction entirely by telephone at these later
times, however, the remittance transfer provider must comply with the
foreign language requirements of Sec. 205.31(g)(3), discussed below.
Proposed comment 31(e)-3 clarifies that a sender may transfer funds
from his or her account, as defined by Sec. 205.2(b), that is held by
the remittance transfer provider. For example, a financial institution
may send an international wire transfer for a sender using funds from
the sender's account with the institution. If the sender conducts such
a transfer entirely by telephone, the institution may provide a written
receipt on or with the sender's next regularly scheduled periodic
statement or within 30 days after payment is made for the remittance
transfer if a periodic statement is not required.
The Board requests comment on the timing requirements for the
disclosures required by Sec. 205.31.
31(f) Accurate When Payment Is Made
Proposed Sec. 205.31(f) provides that disclosures required by
Sec. 205.31(b) must be accurate when a sender pays for the remittance
transfer, except as permitted by proposed Sec. 205.32. As discussed
above in proposed Sec. 205.31(e)(1), a combined disclosure provided
under Sec. 205.31(b)(3) must be provided to the sender when the sender
requests the remittance transfer, but prior to payment for the
remittance transfer. EFTA Section 919 does not require that the
information provided in the required disclosures be guaranteed for any
period of time. However, EFTA Section 919(a)(5)(C) requires that the
combined disclosure must be accurate when payment is made. The Board
believes the statute intends to ensure that the information disclosed
to senders in the required disclosures reflects the terms of the
transaction.
Proposed comment 31(f)-1 clarifies that a remittance transfer
provider is not required to guarantee the terms of the remittance
transfer in the disclosures required by Sec. 205.31(b) for any
specific period of time. However, if any of the disclosures required by
Sec. 205.31(b) are not accurate when a sender pays for the remittance
transfer, a provider must give new disclosures before receiving payment
for the remittance transfer. For example, a sender at a retail store
may be provided a pre-payment disclosure under Sec. 205.31(b)(1) at a
customer service desk, but the sender may decide to leave the desk to
go shopping. Upon the sender's return to the customer service desk an
hour later, the sender must be provided a new pre-payment disclosure if
any of the information has changed. However, the sender need not be
provided a new disclosure if the information has not changed.
31(g) Foreign Language Disclosures
EFTA Section 919(b) provides that disclosures required under EFTA
Section 919 must be made in English and in each of the foreign
languages principally used by the remittance transfer provider, or any
of its agents, to advertise, solicit, or market, either orally or in
writing, at that office. Proposed Sec. 205.31(g)(1) implements EFTA
Section 919(b) for written or electronic disclosures generally, with
the modifications discussed below. In addition, the Board proposes to
exempt oral disclosures and written receipts for telephone transactions
from the general foreign language disclosure requirements of EFTA
Section 919(b) and proposed Sec. 205.31(g)(1). Instead, the Board is
proposing different foreign language requirements for those disclosures
under proposed Sec. Sec. 205.31(g)(2) and (g)(3), respectively.
31(g)(1) General
Proposed Sec. 205.31(g)(1) contains the general requirements for
foreign language disclosures. Specifically, proposed Sec. 205.31(g)(1)
provides that disclosures required under Subpart B, other than oral
disclosures and written receipts for telephone transactions, must be
made in English and either: (i) In each of the foreign languages
principally used by the remittance transfer provider to advertise,
solicit, or market remittance transfer services, either orally, in
writing, or electronically, at that office; or (ii) if applicable, in
the foreign language primarily used by the sender with the remittance
transfer provider to conduct the transaction (or for written or
electronic disclosures made pursuant to Sec. 205.33, in the foreign
language primarily used by the sender with the remittance transfer
provider to assert the error), provided that such foreign language is
principally used by the remittance transfer provider to advertise,
solicit, or market remittance transfer services, either orally, in
writing, or electronically, at that office.
Proposed Sec. 205.31(g)(1) generally implements EFTA Section
919(b) with
[[Page 29918]]
the following modifications. First, proposed Sec. 205.31(g)(1) only
applies to written or electronic disclosures. Oral disclosures are
addressed separately in proposed Sec. 205.31(g)(2), discussed below.
Second, to simplify the statutory language in EFTA Section 919(b),
proposed Sec. 205.31(g)(1) does not incorporate the term ``or any of
its agents.'' This is consistent with other sections of Subpart B that
reference the remittance transfer provider, where the reference also
applies to any of the remittance transfer provider's agents to the
extent such agents act for the provider. Third, while EFTA Section
919(b) does not explicitly reference electronic advertising,
soliciting, or marketing, proposed Sec. 205.31(g)(1) provides that
foreign languages principally used by the remittance transfer provider
to advertise, solicit, or market electronically are also triggered.
Fourth, proposed Sec. 205.31(g)(1) is triggered only by foreign
language advertisements, solicitations, or marketing of remittance
transfer services, and not by foreign language advertisements,
solicitations, or marketing of other products or services. Many
remittance transfer provider agent offices are located in retail
establishments where other financial and non-financial products or
services are advertised, solicited, or marketed. For example, an agent
of a remittance transfer provider may be located at a grocery store or
convenience store. A remittance transfer provider should be able to
institute controls on an agent's advertising of the provider's
remittance transfer services, but a provider would have little or no
control over an agent's advertising practices for any other product or
service. Therefore, proposed Sec. 205.31(g)(1) clarifies that only
advertisements, solicitations, or marketing of the provider's
remittance transfer services trigger foreign language disclosures under
the rule.
Finally, proposed Sec. 205.31(g)(1) would allow a remittance
transfer provider to fulfill its obligations by providing the consumer
with disclosures in English and, if applicable, the one triggered
foreign language primarily used by the sender with the remittance
transfer provider to conduct the transaction or assert an error in lieu
of each of the triggered foreign languages. Permitting this flexibility
facilitates compliance with the provision, particularly for a
remittance transfer provider who advertises, solicits, and markets in
several foreign languages. In such cases, the remittance transfer
provider may find it cumbersome to provide disclosures in English and
in multiple foreign languages. Such flexibility may also benefit
consumers because disclosures containing several foreign languages may
also be confusing for consumers to read and understand.
As a result, the Board proposes to use its authority under EFTA
Section 904(c) to give remittance transfer providers the flexibility to
provide senders with written or electronic disclosures in English and
either: (i) In each foreign language that the remittance transfer
provider principally uses to advertise, solicit, or market remittance
transfer services at that office; or (ii) if applicable, in the foreign
language primarily used by the sender with the remittance transfer
provider to conduct the transaction (or for written disclosures
provided pursuant to proposed Sec. 205.33, the foreign language
primarily used by the sender with the remittance transfer provider to
assert the error), provided that such foreign language is principally
used to advertise, solicit, or market remittance transfer services at
that office. Proposed Sec. Sec. 205.31(g)(1)(i) and (ii).
In order to clarify proposed Sec. 205.31(g)(1), the Board also
proposes several comments to provide guidance on the terms
``principally used,'' ``advertise, solicit, and market,'' and ``at that
office.''
Principally Used
Proposed comment 31(g)(1)-1 clarifies when a foreign language is
principally used. The term ``principally used'' could be interpreted to
mean the foreign language that is used most frequently or most
prominently. The Board, however, does not believe this meaning is
consistent with the statutory language, which provides that disclosures
must be provided ``in each of the foreign languages'' principally used.
Thus, the statute indicates that more than one foreign language may be
principally used. Consequently, the term ``principally used'' does not
appear to be limited to the one foreign language that is used most by
the remittance transfer provider.
The Board also does not believe that any use of a foreign language
by a remittance transfer provider to advertise, solicit, or market
should automatically trigger the foreign language disclosure
requirement. Such a reading would essentially read out the term
``principally'' from the statute. Therefore, the Board believes that
proper interpretation of the statute requires a reading that is between
these two extremes.
The term ``principally used'' could signify the use of a foreign
language in a manner that is not minor or incidental. The Board
believes this interpretation may be more consistent with the statute.
The Board also believes that whether a foreign language is principally
used must be determined based on the facts and circumstances. In the
Board's view, factors that contribute to whether a foreign language is
principally used include: (i) The frequency with which the remittance
transfer provider advertises, solicits, or markets remittance transfers
in a foreign language at a particular office; (ii) the prominence of
such advertising, soliciting, or marketing in that language at that
office; and (iii) the specific foreign language terms used to
advertise, solicit, or market remittance transfer services at that
office. The Board believes that when a foreign language is used
frequently and is featured prominently to advertise, solicit, or market
remittance transfer services at a particular office, and when the
specific foreign language terms used in such advertisements,
solicitations, and marketing convey the availability of remittance
transfer services, it may lead a reasonable consumer to expect to
receive information on remittance transfer services in that language at
that office. In such a case, the Board believes the foreign language
has been principally used by the remittance transfer provider to
advertise, solicit, or market remittance transfer services at that
office.
Proposed comment 31(g)(1)-1 provides guidance on when a foreign
language may be principally used to advertise, solicit, or market
remittance transfer services and includes examples to illustrate when a
foreign language is principally used and when there is incidental use
of the language. Specifically, proposed comment 31(g)(1)-1 provides
that an advertisement for remittance transfer services, including rate
and fee information, that is featured prominently at an office and is
entirely in English, except for a sentence advising consumers to ``Ask
us about our foreign remittance services'' in a foreign language, may
create an expectation that a consumer could receive information on
remittance transfer services in that foreign language. Thus, based on
the prominence of the advertisement using the foreign language and the
specific terms of the foreign language used in the advertisement
inviting a consumer to inquire about remittance transfer services, the
foreign language would be considered to be principally used to
advertise, solicit, or market remittance transfer services. In
contrast, the
[[Page 29919]]
proposed comment provides that an advertisement for remittance transfer
services, including rate and fee information, that is featured
prominently at an office and is entirely in English, except for the
incidental use of one word of greeting in a foreign language, may not
create an expectation that a consumer could receive information on
remittance transfer services in that foreign language, and would,
therefore, not trigger the foreign language disclosure requirement,
based on the specific foreign language term used.
The Board also considered an objective standard based on whether a
foreign language meets a certain percentage threshold of a remittance
transfer provider's advertisements at a particular office as an
appropriate way to measure if such a language is principally used.
However, such a standard would be arbitrary, may be difficult to
administer, and may inappropriately exclude instances where a foreign
language is principally used to advertise, solicit or market remittance
transfers, even if the number of advertisements in the foreign language
is nominally low. For these reasons, the Board believes that a facts-
and-circumstances approach that considers not only the frequency with
which the foreign language is used, but also the prominence with which
the foreign language is featured and the specific foreign language
terms used in any advertisement, soliciting, or marketing, would best
effectuate the statute and protect consumers.
Advertise, Solicit, or Market
Neither the EFTA nor Regulation E defines advertising, soliciting,
or marketing.\32\ The general concept of advertising, soliciting, or
marketing is explained in other Board regulations. See, e.g.,
Regulation Z, 12 CFR 226.2(a)(2) and associated commentary; Regulation
DD, 12 CFR 230.2(b) and 11(b) and associated commentary.
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\32\ Regulation E contains some guidance on whether a card,
code, or other device is ``marketed or labeled as a gift card or
gift certificate'' or ``marketed to the general public'' for
purposes of the Board's gift card rule. See comments 20(b)(2)-2,
20(b)(2)-3, and 20(b)(4)-1. However, that guidance focuses on a
narrow set of circumstances and does not address more broadly what
actions generally constitute advertising, soliciting, or marketing.
---------------------------------------------------------------------------
Proposed comment 31(g)(1)-2 provides both positive and negative
examples of advertising, soliciting, or marketing in a foreign
language. The proposed comment borrows applicable examples from the
commentary to Sec. Sec. 226.2(a)(2) and 230.2(b) regarding the
definition of ``advertisement,'' as well as examples related to the
promotion of overdrafts under Sec. 230.11(b). The proposed comment
includes examples that could apply to a remittance transfer provider's
interactions with a consumer.
At That Office
Under EFTA Section 919(b) and proposed Sec. 205.31(g)(1), the
requirement that a remittance transfer provider provide foreign
language disclosures is based on whether the foreign language is
principally used to advertise, solicit, or market ``at that office.''
Proposed comment 31(g)(1)-3 clarifies the meaning of ``office'' as used
in Sec. 205.31(g)(1). The Board believes that an office of a
remittance transfer provider includes both physical and non-physical
locations where remittance transfer services are offered to consumers.
Because transactions may be conducted, and errors may be asserted, by
telephone and through the Internet, the proposal states that an office
includes any telephone number or Web site through which a consumer can
complete a transaction or assert an error. Therefore, a telephone
number or Web site that provides general information about the
remittance transfer provider, but through which a consumer does not
have the ability to complete a transaction or assert an error, is not
an office.
Proposed comment 31(g)(1)-3 also clarifies that a location need not
exclusively offer remittance transfer services in order to be
considered an office for purposes of Sec. 205.31(g)(1). Many agents of
remittance transfer providers are located in retail establishments
where other financial and non-financial products or services may be
sold. The proposed comment includes an example stating that if an agent
of a remittance transfer provider is located in a grocery store, the
grocery store is considered an office for purposes of Sec.
205.31(g)(1).
Proposed comment 31(g)(1)-4 provides guidance on the term ``at that
office.'' Specifically, the proposed comment states that any
advertisement, solicitation, or marketing that is posted, provided, or
made at a physical office is considered to be advertising, soliciting,
or marketing at that office. Moreover, proposed comment 31(g)(1)-4 also
provides that advertisements, solicitations, or marketing posted,
provided, or made on a Web site of a remittance transfer provider, or
during a telephone call with the remittance transfer provider also
constitute advertising, soliciting, or marketing at an office of a
remittance transfer provider.
The proposed comment also states that for error resolution
disclosures provided pursuant to Sec. 205.33, the relevant office is
the office in which the sender first asserts the error and not the
office where the remittance transfer was conducted. The Board believes
the office in which the sender first asserts the error is the
appropriate office to determine whether the foreign language
advertising disclosure requirement has been triggered because the
remittance transfer provider may not know where the disputed remittance
transfer was conducted or may not be able to determine whether the
foreign language advertising disclosure requirement was triggered at
that office.
31(g)(2) Oral Disclosures
As noted above, the Board proposes to exempt oral disclosures from
the general foreign language disclosure rule. Instead, proposed Sec.
205.31(g)(2) would require that disclosures permitted to be provided
orally under Sec. 205.31(a)(3) for transactions conducted entirely by
telephone must be made in the language primarily used by the sender
with the remittance transfer provider to conduct the transaction.
Proposed Sec. 205.31(g)(2) would also provide that disclosures
permitted to be provided orally under proposed Sec. 205.31(a)(4) for
error resolution purposes must be made in the language primarily used
by the sender with the remittance transfer provider to assert the
error.
The Board believes that application of the foreign language
disclosure requirement in EFTA Section 919(b) to oral disclosures may
not be effective or optimal. First, under EFTA Section 919(b), a
foreign language must be principally used by the remittance transfer
provider to advertise, solicit, or market remittance transfers at an
office in order to be required for disclosures. If this trigger applied
to oral disclosures, a sender conducting a transaction or asserting an
error in a foreign language that did not meet the foreign language
advertising trigger may only receive required oral disclosures in
English. Such a result could undermine a sender's ability to comprehend
important information related to the transaction. This is especially
problematic if the remittance transfer provider conducted the actual
transaction or communicated with the sender regarding the error
asserted by the sender in a foreign language, then switched to English
to disclose the required information under Subpart B. Instead, the
Board believes senders would benefit from having the required
disclosures provided in the same language primarily used by the sender
[[Page 29920]]
with the remittance transfer provider to conduct the transaction or
assert the error, regardless of whether the language meets the foreign
language advertising trigger. As a result, the Board believes foreign
language disclosures are especially important in this context.
Second, the Board believes disclosures that are permitted to be
provided orally under Sec. Sec. 205.31(a)(3) and (4) should be
provided only in the language primarily used to conduct the transaction
or assert the error. EFTA Section 919(b) requires that disclosures be
given in English and in each of the triggered foreign languages. Thus,
if EFTA Section 919(b) applied to oral transactions, a sender
conducting a telephone transaction or receiving the results of an error
investigation orally could be given disclosures in English and in every
foreign language triggered by the regulation. It is unlikely that
providing oral disclosures in two or more languages would be helpful to
senders.
For these reasons, the Board proposes to use its authority under
EFTA Section 904(c) to exempt oral disclosures from the foreign
language requirement under EFTA Section 919(b). At the same time, the
Board proposes to use its authority under EFTA Section 919(a)(5)(A) to
condition the availability of oral disclosures for transactions
conducted entirely by telephone on the remittance transfer provider
making such disclosures in the language primarily used by the sender
with the remittance transfer provider to conduct the transaction.
Furthermore, the Board proposes to use its EFTA Section 904(a)
authority to permit oral disclosure of certain error resolution
investigation results, as discussed below in the supplementary
information to Sec. 205.33(c)(1), provided that the oral disclosure of
such error resolution investigation results must be made in the
language primarily used by the sender with the remittance transfer
provider to assert the error.
31(g)(3) Written Receipt for Telephone Transactions
Proposed Sec. 205.31(g)(3) would require that written receipts
required to be provided to the sender after payment under proposed
Sec. 205.31(e)(2) for transactions conducted entirely by telephone
must be made in English and, if applicable, in the foreign language
primarily used by the sender with the remittance transfer provider to
conduct the transaction. The Board proposes to implement this provision
by using its authority under EFTA Section 904(c) to exempt such written
receipts from the foreign language disclosure requirement of EFTA
Section 919(b). At the same time, the proposal imposes a new
requirement that the remittance transfer provider make such disclosures
in English, and if applicable, in the language primarily used by the
sender with the remittance transfer provider to conduct the
transaction, regardless of whether such foreign language is primarily
used by the remittance transfer provider to advertise, solicit, or
market remittance transfers. See EFTA Section 919(a)(5)(B).
The Board believes that because the pre-payment disclosures will be
provided orally in the language primarily used by the sender with the
remittance transfer provider to conduct the transaction entirely by
telephone under proposed Sec. 205.31(g)(2), the same language should
be used in the written receipt provided to the sender under proposed
Sec. 205.31(g)(3) for consistency, regardless of whether the language
meets the foreign disclosure advertising trigger.
Alternatively, the Board could apply the general rule proposed in
Sec. 205.31(g)(1) to the written receipt provided for transactions
conducted entirely by telephone. This would mean that a remittance
transfer provider would not be obligated to provide the written receipt
in a foreign language, even if such foreign language was used to
conduct the telephone transaction, unless the foreign language was
principally used to advertise, solicit, or market remittance transfers
during the telephone call.
In the Board's outreach with industry, remittance transfer
providers generally stated that providing written disclosures in a
foreign language can be more costly and burdensome than providing oral
disclosures in a foreign language. Therefore, the Board requests
comment on whether proposed Sec. 205.31(g)(3) might have the
unintended consequence of reducing the number of foreign languages
remittance transfer providers may offer for telephone transactions.
General Clarifications
The Board also proposes additional commentary to provide general
guidance on issues that affect each of the subsections of Sec.
205.31(g) discussed above. Proposed comment 31(g)-1 addresses the
number of languages contained in a written or electronic disclosure.
EFTA Section 919(b) does not limit the number of languages that may be
used on a single disclosure. However, the Board is concerned that too
many languages on a single written document may diminish a consumer's
ability to read and understand the disclosures. The Board's proposed
rule in Sec. 205.31(g)(2) and (g)(3) regarding oral disclosures and
written receipts for telephone transactions, as discussed above, limit
the number of languages used in the disclosures. For written or
electronic disclosures under Sec. 205.31(g)(1), however, there is no
stated limit to the number of languages appearing on a disclosure.
Proposed comment 31(g)-1 suggests that a single written or
electronic document containing more than three languages is not likely
to be helpful to a consumer. The proposed commentary is not a strict
limit and leaves open the possibility that a single written or
electronic document may contain more than three languages yet still be
helpful to a consumer, depending on how the information is presented.
The Board seeks comment on whether three languages is an appropriate
suggested limit to the number of languages in a single written or
electronic document and whether the regulation should strictly limit
the number of languages that may be contained in a single written or
electronic disclosure.
As discussed above, proposed Sec. 205.31(g)(1) provides
flexibility to remittance transfer providers to provide senders with
written or electronic disclosures in English and either: (i) In each
foreign language that the remittance transfer provider principally uses
to advertise, solicit, or market at that office; or (ii) if applicable,
in the foreign language primarily used by the sender with the
remittance transfer provider to conduct the transaction (or for written
or electronic disclosures pursuant to Sec. 205.33, the foreign
language primarily used by the sender with the remittance transfer
provider to assert the error), provided that the foreign language is
principally used to advertise, solicit, or market at that office.
Proposed comment 31(g)-1 clarifies that the remittance transfer
provider may provide disclosures in a single document with both
languages or in two separate documents with one document in English and
the other document in the applicable foreign language.
To illustrate this concept, the Board proposes several examples in
comment 31(g)-1. If a remittance transfer provider principally uses
only Spanish and Vietnamese to advertise, solicit, or market remittance
transfer services at a particular office, the proposed comment provides
that the remittance transfer provider may provide all of its consumers
with disclosures in English, Spanish, and Vietnamese, regardless of the
language the consumer uses with the remittance transfer to conduct the
transaction or assert the error.
[[Page 29921]]
Alternatively, if a sender primarily uses Spanish to conduct the
transaction or assert an error, the proposed comment states that the
remittance transfer provider may provide the written disclosure in
English and Spanish, whether in a single document or two separate
documents. If the sender primarily uses English with the remittance
transfer provider to conduct the transaction or assert an error, the
remittance transfer provider may provide the written or electronic
disclosure solely in English. If the sender primarily uses a language
with the remittance transfer provider to conduct the transaction or
assert an error that the remittance transfer provider does not use to
advertise, solicit, or market either orally, in writing, or
electronically, at that office, the proposed comment provides that the
remittance transfer provider may provide the written or electronic
disclosure solely in English.
Proposed comment 31(g)-2 clarifies when a language is primarily
used by the sender with the remittance transfer provider to conduct a
transaction and assert an error. As discussed above, under proposed
Sec. 205.31(g)(1)(ii), remittance transfer providers have the
flexibility to provide written or electronic disclosures in English,
and if applicable, in the foreign language primarily used by the sender
with the remittance transfer provider to conduct the transaction.
Proposed Sec. 205.31(g)(1)(ii) also provides that for written or
electronic disclosures provided pursuant to Sec. 205.33, remittance
transfer providers have the flexibility to provide such disclosures in
English, and if applicable, in the foreign language primarily used by
the sender with the remittance transfer provider to assert the error.
Also, as discussed above, proposed Sec. Sec. 205.31(g)(2) and (g)(3)
require disclosures in the language that is primarily used by the
sender with the remittance transfer provider to conduct the transaction
or assert an error.
Proposed comment 31(g)-2 provides guidance on determining the
language that is primarily used by the sender with the remittance
transfer provider to conduct a transaction or assert an error. The
proposed comment clarifies that the language primarily used by the
sender with the remittance transfer provider to conduct the transaction
is the primary language used to convey the information necessary to
complete the transaction. Proposed comment 31(g)-2 also states that the
language primarily used by the sender with the remittance transfer
provider to assert an error is the primary language used by the sender
with the remittance transfer provider to provide the information
required by Sec. 205.33(b) to assert an error.
The proposed comment also provides examples to clarify this
concept. Under one proposed example, a sender initiates a conversation
with a remittance transfer provider in English and expresses interest
in sending a remittance transfer to Mexico. If, based on that
knowledge, the remittance transfer provider offers to communicate in
Spanish with the sender, and the sender conveys the other information
necessary to complete the transaction in Spanish, including the
designated recipient's information and the amount and funding source of
the transfer, then Spanish is the language primarily used by the sender
with the remittance transfer provider to conduct the transaction. Under
a second example, a sender initiates a conversation with the remittance
transfer provider and tells the remittance transfer provider that there
was a problem with a prior remittance transfer to Vietnam. If, based on
that knowledge, the remittance transfer provider offers to communicate
in Vietnamese with the sender, and the sender conveys the information
required by Sec. 205.33(b) to assert an error in Vietnamese, then
Vietnamese is the language primarily used by the sender with the
remittance transfer provider to assert the error.
Section 205.32 Estimates
In some instances, a remittance transfer provider will not know the
amount of currency that a designated recipient will receive. This may
happen because the provider does not know the applicable exchange rate
or the applicable fees or taxes that may be deducted from the amount
transferred. To address these circumstances, the statute provides two
exceptions to the requirement to disclose the amount of currency that
will be received by the designated recipient.
The first exception (the ``temporary exception'') is in EFTA
Section 919(a)(4) and states that, subject to rules prescribed by the
Board, disclosures regarding the amount of currency that will be
received by the designated recipient will be deemed to be accurate so
long as the disclosure provides a reasonably accurate estimate of the
amount of foreign currency to be received. A remittance transfer
provider may use this exception only if: (1) It is an insured
depository institution or insured credit union (collectively, an
``insured institution'' as described in more detail below) conducting a
transfer through an account that the sender holds with it; and (2) it
is unable to know, for reasons beyond its control, the amount of
currency that will be made available to the designated recipient. See
EFTA Section 919(a)(4). This exception expires five years after the
enactment of the Dodd-Frank Act, or July 20, 2015. If the Board
determines that expiration of the exception would negatively affect the
ability of insured institutions to send remittances to foreign
countries, the Board may extend the exception to not longer than ten
years after enactment. See EFTA Section 919(a)(4)(B).
The second exception (the ``permanent exception'') is in EFTA
Section 919(c). It states that if the Board determines that a recipient
country does not legally allow, or the method by which transactions are
made in the recipient country do not allow, a remittance transfer
provider to know the amount of currency that will be received by the
designated recipient, the Board may prescribe rules addressing the
issue. EFTA Section 919(c) further states that the Board's rules shall
include standards for the remittance transfer provider to provide: (1)
A receipt that is consistent with EFTA Sections 919(a) and (b); and (2)
a reasonably accurate estimate of the foreign currency to be received.
The second exception does not have a sunset date.
The Board proposes Sec. 205.32 to implement the exceptions set
forth in EFTA Sections 919(a)(4) and (c). Proposed Sec. 205.32 would
permit a remittance transfer provider to disclose estimates if it
cannot determine exact amounts for the reasons specified in the
statute.
32(a) Temporary Exception for Insured Institutions
Proposed Sec. 205.32(a)(1) implements the temporary exception set
forth in EFTA Section 919(a)(4)(A) by permitting estimates to be
provided in accordance with proposed Sec. 205.32(c) for the
disclosures required by proposed Sec. Sec. 205.31(b)(1)(iv)-(vii), if:
(1) A remittance transfer provider cannot determine exact amounts for
reasons beyond its control; (2) a remittance transfer provider is an
insured institution; and (3) the remittance transfer is sent from the
sender's account with the insured institution. For purposes of proposed
Sec. 205.32, the term ``insured institution'' includes insured
depository institutions as defined in Section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813) and insured credit unions as defined in
Section 101 of the Federal Credit Union Act (12 U.S.C. 1752). See
proposed Sec. 205.32(a)(3).
[[Page 29922]]
EFTA Section 919(a)(4) only addresses estimates for the amount of
currency that will be received by a designated recipient. Nonetheless,
proposed Sec. 205.32(a) also would permit disclosure of an estimate
for the exchange rate, the transfer amount in the currency made
available to the designated recipient, the fees imposed by
intermediaries in the transmittal route, and taxes imposed in the
recipient country that are a percentage of the amount transferred to
the designated recipient. These items must be disclosed under proposed
Sec. 205.31(b)(1)(iv), (v), and (vi), respectively. The inability to
determine the exact amount of one or more of these additional items is
the reason why the amount of currency that will be received by the
designated recipient must be estimated. The Board believes that, by
permitting an estimate of the amount of currency that will be received,
Congress intended to permit estimates of the components that determine
that amount. Furthermore, the Board believes that permitting estimates
of these additional items will help consumers to understand why the
amount of currency that will be received is displayed as an estimate.
EFTA Section 919(a)(4) permits the use of an estimate of the amount
of foreign currency that will be received by a designated recipient.
However, proposed Sec. 205.32(a) permits an insured institution to
provide an estimate of the currency that will be received, whether it
is in U.S. dollars or foreign currency. Many consumers send remittance
transfers which are to be paid to the designated recipient in U.S.
dollars. When an insured institution sends a remittance via
international wire transfer, fees are sometimes deducted by
intermediary institutions in the transmittal route with which the
sending institution has no correspondent relationship.\33\ Although the
insured institution may not know the total amount of these fees in
advance, it must disclose them to the sender under proposed Sec.
205.31(b)(1)(vi). The amount of currency that will be received by the
designated recipient, whether that currency is U.S. dollars or foreign
currency, will be an estimate if fees imposed by intermediaries are
estimates. Therefore, the Board is exercising its authority under EFTA
Section 904(c) to allow an estimate of the amount of currency that will
be received, even if that currency is in U.S. dollars.
---------------------------------------------------------------------------
\33\ A correspondent relationship is where one financial
institution has a contractual arrangement to hold deposits and
provide services to another financial institution, which has limited
access to certain financial markets. Such agreements permit the
financial institution to provide services to account holders without
incurring the expense of setting up a branch in another city or
country.
---------------------------------------------------------------------------
The proposed commentary to proposed Sec. 205.32(a)(1) provides
further guidance on the temporary exception. Proposed comment 32(a)(1)-
1 explains that an insured institution cannot determine exact amounts
``for reasons beyond its control'' when: (1) The exchange rate required
to be disclosed under Sec. 205.31(b)(1)(iv) is set by a person with
which the insured institution has no correspondent relationship after
the insured institution sends the remittance transfer; or (2) fees
required to be disclosed under Sec. 205.31(b)(1)(vi) are imposed by
intermediary institutions along the transmittal route and the insured
institution has no correspondent relationship with those institutions.
Proposed comment 32(a)(1)-2 provides examples of scenarios that
qualify for the temporary exception. For instance, an insured
institution cannot determine the exact exchange rate required to be
disclosed under Sec. 205.31(b)(1)(iv) for an international wire
transfer if the insured institution does not set the exchange rate, and
the rate is instead later set by the designated recipient's institution
with which the insured institution does not have a correspondent
relationship. The insured institution will not know the date on which
funds will be deposited into the recipient's account, and will not know
the exchange rate that will be applied on that date. Proposed comment
32(a)(1)-2.i. Further, an insured institution cannot determine the
exact fees required to be disclosed under Sec. 205.31(b)(1)(vi) if an
intermediary institution or the designated recipient's institution,
with which the insured institution does not have a correspondent
relationship, imposes a transfer or conversion fee. Proposed comment
32(a)(1)-2.ii. Finally, an insured institution cannot determine the
exact taxes required to be disclosed under Sec. 205.31(b)(1)(vi) if
the insured institution cannot determine the applicable exchange rate
or other fees, as described in proposed comments 32(a)(1)-2.i and -
2.ii, and the recipient country imposes a tax that is a percentage of
the amount transferred to the designated recipient, less any other
fees. Proposed comment 32(a)(1)-2.iii.
Proposed comment 32(a)(1)-3 provides several examples of when an
insured institution will not qualify for the exception in Sec.
205.32(a). In each case, the insured institution can determine the
exact amount for the relevant disclosure. First, the proposed comment
explains that an insured institution can determine the exact exchange
rate required to be disclosed under Sec. 205.31(b)(1)(iv) if it
converts the funds into the local currency to be received by the
designated recipient using an exchange rate that it sets. Proposed
comment 32(a)(1)-3.i. Second, the proposed comment states that an
insured institution can determine the exact fees required to be
disclosed under Sec. 205.31(b)(1)(vi) if it has negotiated specific
fees with a correspondent institution, and the correspondent
institution is the only institution in the transmittal route to the
designated recipient's institution. Proposed comment 32(a)(1)-3.ii.
Finally, the proposed comment notes that an insured institution can
determine the exact taxes required to be disclosed under Sec.
205.31(b)(1)(vi) if the recipient country imposes a tax that is a
percentage of the amount transferred to the designated recipient, less
any other fees, and the insured institution can determine the exact
amount of the applicable exchange rate and other fees. Similarly, the
insured institution can determine these taxes if the recipient country
imposes a flat tax that is not tied to the amount transferred. Proposed
comment 32(a)(1)-3.iii.
If an insured institution can determine the exact exchange rate,
fees, and taxes required to be disclosed under proposed Sec.
205.31(b)(1)(iv) and (vi), it can determine the exact amounts to be
derived from calculations involving them. For instance, the insured
institution could determine both the transfer amount expressed as local
currency and the amount in local currency that will be received by the
designated recipient required to be disclosed under proposed Sec.
205.31(b)(1)(v) and (vii), respectively.
Proposed Sec. 205.32(a)(2) provides that proposed Sec.
205.32(a)(1) expires on July 20, 2015, consistent with the five-year
term set forth in EFTA Section 919(a)(4)(B). EFTA Section 919(a)(4)(B)
gives the Board authority to extend the application of proposed Sec.
205.32(a)(2) to July 20, 2020, if it determines that termination of the
exception would negatively affect the ability of insured institutions
to send remittances to foreign countries. The Board understands that
this exception was intended to avoid immediate disruption of remittance
transfer services by insured institutions using international wire
transfers. The exception gives these financial institutions time to
reach agreements and modify systems to provide accurate disclosures.
[[Page 29923]]
32(b) Permanent Exception for Transfers to Certain Countries
Proposed Sec. 205.32(b) implements the permanent exception set
forth in EFTA Section 919(c) by allowing estimates to be provided in
accordance with proposed Sec. 205.32(c) for amounts required to be
disclosed under proposed Sec. 205.31(b)(1)(iv)-(vii) for transfers to
certain countries. Like the temporary exception in EFTA Section
919(a)(4), the permanent exception in EFTA Section 919(c) only
addresses estimates for the amount of currency that will be received by
a designated recipient. For the reasons described above, proposed Sec.
205.32(b) also permits disclosure of estimates for the exchange rate,
the transfer amount in the currency made available to the designated
recipient, and taxes imposed in the recipient country that are a
percentage of the amount transferred to the designated recipient. These
items are required to be disclosed under proposed Sec.
205.31(b)(1)(iv), (v), and (vi), respectively.
32(b)(1) Laws of Recipient Country
Proposed Sec. 205.32(b)(1) allows estimates to be provided in
accordance with proposed Sec. 205.32(c) for the disclosures required
by proposed Sec. 205.31(b)(1)(iv)-(vii), if a remittance transfer
provider cannot determine exact amounts because the laws of the
recipient country do not permit such a determination.
The proposed commentary provides guidance on this standard.
Specifically, proposed comment 32(b)(1)-1 clarifies that the ``laws of
the recipient country'' do not permit a remittance transfer provider to
determine exact amounts when a law or regulation of the recipient
country requires the person making funds directly available to the
designated recipient to apply an exchange rate that is: (1) Set by the
government of the recipient country after the remittance transfer
provider sends the remittance transfer; or (2) set when the designated
recipient chooses to claim the funds.
Proposed comments 32(b)(1)-2.i and -2.ii provide examples
illustrating the application of the exception. Proposed comment
32(b)(1)-2.i explains that the laws of the recipient country do not
permit a remittance transfer provider to determine the exact exchange
rate required to be disclosed under Sec. 205.31(b)(1)(iv) when, for
example, the government of the recipient country sets the exchange rate
daily and the funds are made available to the designated recipient in
the local currency the day after the remittance transfer provider sends
the remittance transfer. Under such circumstances, an estimate for the
exchange rate is permitted because the remittance transfer provider
cannot determine a rate that a foreign government has yet to set.
In contrast, proposed comment 32(b)(1)-2.ii explains that the laws
of the recipient country permit a remittance transfer provider to
determine the exact exchange rate required to be disclosed under Sec.
205.31(b)(1)(iv) if, for example, the government of the recipient
country pegs the value of its currency to the U.S. dollar.
32(b)(2) Method by Which Transactions Are Made in the Recipient Country
Proposed Sec. 205.32(b)(2) allows estimates to be provided in
accordance with proposed Sec. 205.32(c) for the disclosures required
by proposed Sec. 205.31(b)(1)(iv)-(vii), if a remittance transfer
provider cannot determine exact amounts because the method by which
transactions are made in the recipient country does not permit such a
determination.
Based on the Board's outreach and interpretation of the statute,
the Board believes that the exception for methods by which transactions
are made in the recipient country was intended to permit estimates for
certain international ACH transactions. Specifically, the Board
interprets the exception to apply to remittances sent via international
ACH on terms negotiated by the government of the United States and the
government of a recipient country where the exchange rate is set after
the transfer is sent. Accordingly, proposed comment 32(b)(2)-1 states
that the ``method by which transactions are made in the recipient
country'' does not permit a remittance transfer provider to determine
exact amounts when transactions are sent via international ACH on terms
negotiated between the United States government and recipient country's
government, under which the exchange rate is set by the recipient
country's central bank after the provider sends the remittance
transfer.
Proposed comment 32(b)(2)-2 provides examples illustrating the
application of the exception provided under proposed Sec.
205.32(b)(2). Proposed comment 32(b)(2)-2.i provides an example of when
a remittance transfer would qualify for the exception. It explains that
a transfer would qualify for the exception when sent via international
ACH on terms negotiated between the United States government and the
recipient country's government, under which the exchange rate is set by
the recipient country's central bank on the business day after the
provider has sent the remittance transfer. Under such circumstances,
the provider cannot determine the exact exchange rate required to be
disclosed under Sec. 205.31(b)(1)(iv). Remittance transfers sent via
Directo a M[eacute]xico currently would qualify for the proposed Sec.
205.32(b)(2) exception.
Proposed comments 32(b)(2)-2.ii and -2.iii provide examples of when
a remittance transfer would not qualify for the Sec. 205.32(b)(2)
exception. Proposed comment 32(b)(2)-2.ii explains that a remittance
transfer provider would not be permitted to provide estimates under the
proposed Sec. 205.32(b)(2) exception if it sends a remittance transfer
via international ACH on terms negotiated between the United States
government and a private-sector entity in the recipient country, under
which the exchange rate is set by the institution acting as the entry
point to the recipient country's payments system on the next business
day. In this case, transactions are made using a method negotiated
between the United States and a private entity. Nonetheless, remittance
transfers sent using such a method may qualify for the Sec. 205.32(a)
temporary exception. In addition, proposed comment 32(b)(2)-2.iii
explains that a remittance transfer provider would not qualify for the
Sec. 205.32(b)(2) exception if, for example, it sends transfers via
international ACH on terms negotiated between the United States
government and the recipient country's government, under which the
exchange rate is set by the recipient country's central bank before the
sender requests a transfer. In such a case, the remittance transfer
provider can determine the exchange rate required to be disclosed.
During outreach, several industry members expressed the view that
international wire transfers are a method by which transactions are
made in a recipient country that does not allow the remittance transfer
provider to know the amount of currency that will be received by a
designated recipient and should qualify for the permanent exception in
EFTA Section 919(c). The Board does not believe that the permanent
exception in EFTA Section 919(c) applies to international wire
transfers because wire transfers are not a method by which transactions
are made that are particular to a specific country or group of
countries. Additionally, the application of the permanent exception to
international wire transfers would make the temporary exception
superfluous. Accordingly, the proposed exception in
[[Page 29924]]
Sec. 205.32(b)(2) does not apply to international wire transfers.
32(c) Bases for Estimates
If a remittance transfer qualifies for either the temporary
exception in EFTA Section 919(a)(4) or the permanent exception in EFTA
Section 919(c), the statute permits the provider to disclose a
reasonably accurate estimate to the sender. The Board believes that
providing an exhaustive list of approaches that will result in a
reasonably accurate estimate may be more helpful to remittance transfer
providers than a less specific standard for calculating estimates.
Thus, proposed Sec. 205.32(c) states that estimates provided pursuant
to the exceptions in proposed Sec. 205.32(a) and (b) must be based on
an approach listed in the regulation for the required disclosure.
Proposed Sec. 205.32(c) further states that if a remittance
transfer provider bases an estimate on an approach that is not listed,
the provider complies with Sec. 205.32(c) so long as the designated
recipient receives the same, or a greater amount, of currency that it
would have received had the estimate been based on a listed approach.
Thus, use of an approach other than one listed in the proposed rule
will not result in a violation, to the extent that the sender is not
harmed by such use.
32(c)(1) Exchange Rate
Proposed Sec. 205.32(c)(1) sets forth the approaches that a
remittance transfer provider may use as the basis of an estimate of the
exchange rate required to be disclosed under proposed Sec.
205.31(b)(1)(iv). Proposed Sec. 205.32(c)(1)(i) states that for
remittance transfers qualifying for the Sec. 205.32(b)(2) exception,
the estimate must be based on the most recent exchange rate set by the
recipient country's central bank and reported by a Federal Reserve
Bank. Proposed comment 32(c)(1)(i)-1 clarifies that if the exchange
rate for a remittance transfer sent via international ACH that
qualifies for the Sec. 205.32(b)(2) exception is set the following
business day, the most recent exchange rate available for a transfer
will be the exchange rate set for the day that the disclosure is
provided, i.e., the current business day's exchange rate.
Proposed Sec. 205.32(c)(1)(ii) provides that, for other transfers,
the estimate must be based on the most recent publicly available
wholesale exchange rate. Proposed comment 32(c)(1)(ii)-1 provides that
publicly available sources of information containing the most recent
wholesale exchange rate for a currency include, for example, U.S. news
services, such as Bloomberg, the Wall Street Journal, and the New York
Times, a recipient country's national news service, and a recipient
country's central bank or other government agency.
However, the Board recognizes that U.S. news services do not list
the exchange rate for every currency and that some remittance transfer
providers may not have access to the national news services or the
information provided by the central bank of a recipient country.
Therefore, proposed Sec. 205.32(c)(1)(iii) permits use of the most
recent exchange rate offered by the person making funds available
directly to the designated recipient as the basis for providing an
estimate. This may require a provider to contact the designated
recipient's institution or payout location to obtain such a rate.
The Board solicits comment on other approaches a remittance
transfer provider might use as the basis for an estimate of the
exchange when the currency that will be paid to the designated
recipient is infrequently traded or when the remittance transfer
provider sends transfers to a recipient country infrequently.
32(c)(2) Transfer Amount in the Currency Made Available to the
Designated Recipient
Proposed Sec. 205.32(c)(2) states that in disclosing the transfer
amount in the currency made available to the designated recipient, as
required under proposed Sec. 205.31(b)(1)(v), an estimate must be
based upon the estimated exchange rate provided in accordance with
Sec. 205.31(c)(1).
32(c)(3) Other Fees Imposed by Intermediaries
Proposed Sec. 205.32(c)(3) provides that one of two approaches
must be used to estimate the fees imposed by intermediary institutions
in connection with an international wire transfer required to be
disclosed under proposed Sec. 205.31(b)(1)(vi). Under the first
approach, an estimate must be based on the remittance transfer
provider's most recent transfer to an account at the designated
recipient's institution. Under the second approach, an estimate must
based on the representations of the intermediary institutions along a
representative route identified by the remittance transfer provider
that the requested transfer could travel. Proposed comment
32(c)(3)(ii)-1 clarifies that a remittance transfer from a sender's
account at an insured institution to the designated recipient's
institution may take several routes, depending on the correspondent
relationships each institution in the transmittal route has with other
institutions. Proposed comment 32(c)(3)(ii)-1 further clarifies that,
in providing an estimate of the fees required to be disclosed under
proposed Sec. 205.31(b)(1)(vi) pursuant to the proposed Sec.
205.32(a) temporary exception, an insured institution may rely upon the
representations of the institutions that act as intermediaries in any
one of the potential transmittal routes that it reasonably believes a
requested remittance transfer may travel.
The Board solicits comment on other approaches that a remittance
transfer provider might use as the basis for calculating an estimate of
the fees imposed by intermediaries for an international wire transfer
when the remittance transfer provider rarely sends transfers to a
requested location.
32(c)(4) Other Taxes Imposed in the Recipient Country
Proposed Sec. 205.32(c)(4) states that, in disclosing taxes
imposed in the recipient country as required under proposed Sec.
205.31(b)(1)(vi) that are a percentage of the amount transferred to the
designated recipient, an estimate must be based on the estimated
exchange rate provided in accordance with Sec. 205.32(c)(1) and the
estimated fees imposed by institutions that act as intermediaries in
connection with an international wire transfer provided in accordance
with Sec. 205.32(c)(3). Proposed comment 32(c)(4)-1 clarifies that
proposed Sec. 205.32(c)(4) permits a provider to give an estimate only
when the taxes imposed in a recipient country are a percentage of the
amount transferred to the designated recipient. In other contexts where
taxes may be imposed, a remittance transfer provider can determine the
exact amount, such as in the case of a flat tax.
32(c)(5) Amount of Currency That Will Be Received by the Designated
Recipient
Proposed Sec. 205.32(c)(5) states that, in disclosing the amount
of currency that will be received by the designated recipient as
required under proposed Sec. 205.31(b)(1)(vii), an estimate must be
based on the estimates provided in accordance with Sec. Sec.
205.32(c)(1), (3), and (4), as applicable.
Storefront and Internet Disclosures
Statutory Requirements
EFTA Section 919(a)(6)(A) states that the Board may prescribe rules
to require a remittance transfer provider to prominently post, and
timely update, a
[[Page 29925]]
notice describing a model remittance transfer for one or more amounts,
as the Board may determine, which notice shall show the amount of
currency that will be received by the designated recipient, using the
values of the currency into which the funds will be exchanged. EFTA
Section 919(a)(6)(A) also states that the Board may require the notice
prescribed to be displayed in every physical storefront location owned
or controlled by the remittance transfer provider. Further, EFTA
Section 919(a)(6)(A) states that the Board shall prescribe rules to
require a remittance transfer provider that provides remittance
transfers via the Internet to provide a notice, comparable to the
storefront notice described in the statute, located on the home page or
landing page (with respect to such remittance transfer services) owned
or controlled by the remittance transfer provider.
EFTA Section 919(a)(6)(B) states that, prior to proposing rules
under EFTA Section 919(a)(6)(A), the Board shall undertake appropriate
studies and analyses, which shall be consistent with EFTA Section
904(a)(2), to determine whether a storefront notice or Internet notice
facilitates the ability of a consumer (1) to compare prices for
remittance transfers, and (2) to understand the types and amounts of
any fees or costs imposed on remittance transfers. EFTA Section
904(a)(2) requires an economic impact analysis that considers the costs
and benefits of a regulation to financial institutions, consumers, and
other users, including the extent to which additional paperwork would
be required, the effects upon competition in the provision of services
among large and small financial institutions, and the availability of
services to different classes of consumers, particularly low income
consumers.
Summary of the Board's Study and Findings
Consistent with EFTA Section 919(a)(6)(B), the Board has reviewed
and analyzed the statute and a variety of independent articles,
studies, and Congressional testimony; conducted outreach with industry
and consumer advocates; and held focus groups with consumers who send
remittance transfers. Based on its findings, discussed in more detail
below, the Board is not proposing a rule that would require the posting
of model remittance transfer notices at a storefront or on the
Internet.
The notice described by the statute would illustrate only one of
several costs of a remittance transfer. Thus, the Board believes that
the statutory notice would not facilitate a consumer's ability to
compare prices or to understand the fees and costs imposed on
remittance transfers. In addition, most consumers would be unable to
apply the information provided by the statutory notice to their own
transfers.
The Board considered alternatives to the type of notice described
in the statute. The Board considered requiring the posting of transfer
fee information for model send amounts, but believes that this
alternative notice would have many of the same limitations as the
statutory notice. The Board also considered requiring a notice that
would reflect all the costs of a transfer as well as the different
variables that affect the total cost of the transaction. A notice with
this alternative content could help consumers to obtain a better
understanding of the costs and fees imposed on remittance transfers.
Nonetheless, the Board believes that the length and complexity of such
notices could limit their utility. In addition, the frequent manual
updates that would be required for any of these storefront notices
raise concerns about accuracy. As described in more detail below, these
factors led to the Board to decide against proposing a rule requiring
remittance transfer providers to post storefront model remittance
transfer notices.
Because the Board is not proposing a rule mandating the posting of
storefront notices, it is not proposing a rule mandating the posting of
Internet notices. As noted above, EFTA Section 919(a)(6)(A) states that
the Board shall prescribe rules to require a remittance transfer
provider that provides remittance transfers via the Internet to provide
a notice comparable to a storefront notice. The Board understands that
the word ``shall'' could be read as mandating the Board to require
model Internet notices regardless of whether it proposes model
storefront notices. However, the Board believes that the provision is
better read as not requiring Internet notices in the absence of any
model storefront notices. The Board believes such a reading is more
consistent with the statute as a whole. For instance, because the Board
is not requiring a storefront notice, there would be no ``comparable''
Internet notice. Moreover, the Board's study of model Internet notices
indicated that consumers using Internet remittance transfer providers
to request remittance transfers would be even less likely to use a
model transfer notice than those using providers at a physical
location. Most Internet providers currently disclose transaction-
specific information prior to the consumer's payment for a transfer.
Proposed Sec. 205.31(b)(1) would make this common practice a
regulatory requirement.
Discussion
Statutory Notice
First, the Board's study showed that the storefront notice as
described by EFTA Section 919(a)(6)(A) would not facilitate a
consumer's ability to compare prices or to understand the fees and
costs imposed on remittance transfers. The statutory storefront notice
would illustrate only one of several costs of a remittance transfer--
that is, the exchange rate offered by that remittance transfer provider
for the particular model transfer amount. In addition to the exchange
rate, the total cost of a remittance transfer includes fees charged by
the remittance transfer provider, any intermediary in the transfer, and
the receiving entity, and any taxes that may be charged in the sending
and receiving jurisdictions (all of which must be disclosed pursuant to
proposed Sec. 205.31(b)(1)). Because the statutory storefront notice
would not address these fees and taxes, it would not present a complete
picture to the consumer of all potential fees and costs for a
remittance transfer, even for the ``model'' send amount.\34\
---------------------------------------------------------------------------
\34\ A significant number of focus group participants request
that their transfers be paid to their designated recipient in U.S.
dollars. These participants would not use the exchange rate and
local currency amount information provided by a statutory storefront
notice.
---------------------------------------------------------------------------
The participants in the focus groups for the Board's consumer
testing generally recognized the limitations of the storefront notice
described in the statute. Participants noted that the information
provided by the storefront notice would permit a customer to calculate
the exchange rate being used by the remittance transfer provider, but
that the information did not disclose the remittance transfer
provider's transfer fee or specify whether there would be a deduction
from the amount to be received by the recipient entity or jurisdiction.
Second, the Board believes that most consumers would be unable to
apply the information provided by a statutory storefront notice to
their own transfers. The fees, exchange rate, and taxes for a
remittance transfer can vary based upon the amount sent, transfer
corridor (i.e., the sending location to the receiving location), speed
of transfer (e.g., the next day, the same day, or in one hour), method
of delivery (e.g., an electronic deposit into a bank account or a cash
disbursement), and type of receiving entity (e.g., a bank or a money
[[Page 29926]]
transmitter's payout partner). Because of these variations, it is
unlikely that a storefront notice as described by the statute would
contain a model transfer pertinent to the consumer's intended transfer.
For example, some remittance transfer providers offer a discount on
their exchange rate margin for large send amounts. Therefore, even if
the consumer's transfer were identical to the model transfer posted in
the storefront notice except for the send amount, the consumer still
may be unable to determine the exchange rate that would apply to the
consumer's transfer based on the storefront notice.
Focus group participants also recognized these shortcomings of the
statutory storefront notices. Participants commented that if they were
sending more than the posted send amount, they would need to ask the
provider how much local currency would be received because the notice
would not necessarily provide the information needed to independently
calculate that amount. Some participants indicated that the statutory
storefront notice would not help them because it would not show how
much money in U.S. dollars they would need to send so that the
recipient would receive a specific amount in local currency.
Third, the Board believes consumers may proceed with their transfer
requests as planned even with the posting of the statutory storefront
notices. A few focus group participants said that they would use the
information in the statutory storefront notice to calculate the
exchange rate offered by that provider and compare it to the wholesale
bank exchange rate published in a national newspaper or the exchange
rate offered by other providers when contemplating future transactions.
However, most participants stated that if they went to a particular
store intending to send money and learned that the exchange rate would
result in the delivery of less local currency to the recipient than
expected, they would still complete the transaction. Because these
participants generally transferred smaller amounts, a slightly lower
exchange rate would have little impact on the total amount of local
currency received.
Alternative Notices
In light of the concerns raised by the statutory storefront
notices, the Board considered proposing two alternative storefront
notices. The first alternative notice would have required remittance
transfer providers to show the transfer fees imposed by the provider
for one or more model send amounts. The second alternative notice would
have required remittance transfer providers to show all the cost
variables for one or more model send amounts. The cost variables would
include: Location of the receiving entity; speed of delivery; fees
charged by the remittance transfer provider, any intermediaries, and
the recipient entity; taxes imposed by sending and receiving
jurisdictions; exchange rate; and amount of currency to be received by
the designated recipient.
The Board considered requiring remittance transfer providers to
display storefront notices showing the transfer fee charged for one or
more model send amounts based on comments made during the focus groups
that posted fee information could be useful. A few focus group
participants noted that a remittance transfer provider's fee, rather
than its exchange rate, accounts for the largest percentage of the
total cost for a transfer. One focus group participant said that he
currently uses fee information posted by two providers to help him to
decide which provider he should use for an upcoming transfer. Another
participant said that he would use a storefront notice with fee
information to shop among providers.
However, a storefront notice containing information regarding the
remittance transfer provider's fees still would not present a complete
picture of all potential costs for a transfer. A storefront notice with
a provider's fee information would not necessarily disclose the
exchange rate, fees imposed by any intermediary in the transfer or the
receiving entity, and taxes imposed by the receiving jurisdiction.
Participants in the Board's one-on-one consumer interviews universally
expressed their wish to know if a recipient would be charged a fee by
the receiving entity or would be taxed by the receiving jurisdiction.
The Board believes that many consumers would not be able to apply
the fee information provided by an alternative notice to their own
transfers. As mentioned above with respect to the statutory storefront
notices, the fee charged by the remittance transfer provider also
varies based on the transfer corridor, speed of transfer, method of
delivery, and type of receiving entity. For example, some providers
charge different fees for sending funds to an urban versus a rural area
in a particular country. Again, because of these variations, a notice
would not necessarily contain a model transfer identical to the
consumer's intended transfer. Further, some remittance transfer
providers use a tiered pricing structure for their fees that would
prevent the consumer from accurately extrapolating the fee for his or
her transfer from the information provided, even if the consumer's
transfer were identical to the model transfer except for the send
amount. Customers who are members of a remittance transfer provider's
loyalty program might be eligible for fee discounts that would not be
reflected in a storefront notice.
A remittance transfer provider's fee generally changes less
frequently than the exchange rate offered for a given transfer, and
accordingly would become outdated less frequently. Some remittance
transfer providers operate in just one or two corridors and charge a
flat fee for transfers under a certain amount within those corridors.
Thus, for these providers, a storefront notice with fee information
arguably would be less burdensome and costly than the statutory
storefront notice to produce, and could ameliorate concerns about the
accuracy of posted information. But, a storefront notice with fee
information posted by global remittance transfer providers would be
long and complex and could be burdensome and costly to produce.
Many focus group participants raised similar concerns when
presented with the idea of a storefront notice showing fee information
as they did regarding a storefront notice showing the amount of local
currency to be received. Thus, the Board believes that, in practice,
alternative storefront notices containing fee information would have
many of the same limitations as the statutory storefront notices
containing information about the amount of currency to be received.
The Board also considered requiring remittance transfer providers
to post a notice that would reflect all the costs of a transfer as well
as the different variables that affect the total cost of the
transaction. However, as described below, the Board believes that the
length and complexity of such notices could discourage consumers' use
of the notice and prove overly burdensome for industry.
Remittance transfer providers that operate in just one or two
corridors with little price variability could produce a storefront
notice reflecting all cost variables that is inexpensive and relatively
simple in nature although, as discussed below, accuracy would continue
to be a concern because currency values frequently fluctuate. A notice
with this content could help consumers to obtain a better understanding
of the costs and fees imposed on remittance transfers.
However, for other providers, a storefront notice for sending a
specified amount to just a single country could contain multiple rows
of information to
[[Page 29927]]
account for differences in pricing based on the transfer method, timing
option, receipt location, and cost permutations described above. Many
providers offer remittance transfers to multiple countries, and several
locations within each country, which would multiply the number of data
points on the notice. The Board believes that a consumer could be
overwhelmed by the amount of data appearing in a long, complex
storefront notice posted by these providers and, therefore, might not
use it. One pilot study on storefront notices containing comprehensive
cost information showed that only 37% of bank and money transmitter
customers sending remittances checked the posting.\35\ Thus, taken as a
whole, the Board does not believe this alternative would benefit
consumers.
---------------------------------------------------------------------------
\35\ Appleseed, Remittance Transparency: Strengthening Business,
Building Community 8 (2009).
---------------------------------------------------------------------------
Both the statutory and the more comprehensive alternate storefront
notice would become inaccurate whenever the exchange rate for a model
transfers changed. As a result, the Board believes a storefront notice
could be unhelpful and even misleading to consumers, while creating
unnecessary legal risks for remittance transfer providers. In
Congressional hearings \36\ and during the Board's outreach, industry
representatives and others expressed concern that, because currency
exchange rates frequently fluctuate, remittance transfer providers
would have to update the storefront notice for each send location
several times a week, or as frequently as several times a day. These
rates could also be different at a single provider's different send
locations. Remittance transfer providers would need to distribute the
updated notices to each send location and each send location would need
to replace the outdated notice just as frequently. Non-exclusive send
locations that offer the services of two or more money transmitters
would have to post and update the storefront notices for each
remittance transfer provider. Compliance concerns are magnified for
providers that have a large network of agents where the providers would
have to rely on store clerks to update disclosures on a timely basis.
Echoing the concerns of industry representatives, focus group
participants also questioned the ability of remittance transfer
providers to keep the notices up to date.
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\36\ See, e.g., Testimony of Mark Thompson, The Western Union
Company, in Hearing Before House Subcomm. on Fin. Insts. And Cons.
Credit, No. 111-39 (June 3, 2009).
---------------------------------------------------------------------------
Finally, the Board is concerned about the effect the storefront
notice requirement would have on competition and costs to the consumer.
Remittance transfer providers that sell their products through agents
have expressed concern that the work involved in posting and updating
storefront notices could cause some agents to stop offering remittance
transfers. Further, credit unions and small banks that infrequently
conduct transfers may find the burden and cost of producing storefront
notices prohibitive and discontinue the service. Given the costs and
risks associated with posting and updating the storefront notices
contemplated by the statute, some providers may exit the market, which
could reduce competition among providers and increase costs for
consumers. For these reasons, the Board is not proposing to require
providers to post model storefront or Internet notices.
Section 205.33 Procedures for Resolving Errors
EFTA Section 919(d) addresses error resolution procedures for
errors in connection with remittance transfers, and requires a sender
to provide notice of an error within 180 days of the promised date of
delivery of a remittance transfer. The notice triggers a remittance
transfer provider's duty to investigate the claim and correct any error
within 90 days of receiving the notice. Proposed Sec. 205.33
implements the new error resolution requirements for remittance
transfers and establishes, where appropriate, error resolution
procedures similar to those that apply to a financial institution under
Sec. 205.11 with respect to errors involving electronic fund
transfers.
33(a) Definition of Error
Proposed Sec. 205.33(a)(1) defines the term ``error'' for purposes
of the error resolution provisions applying to remittance transfers.
The proposed definition lists the types of transfers or inquiries that
constitute errors. Proposed Sec. 205.33(a)(2) lists types of transfers
or inquiries that do not constitute errors. The proposed commentary
provides additional guidance illustrating errors under the rule.
Under proposed Sec. 205.33(a)(1)(i), the term ``error'' includes
an incorrect amount paid by a sender in connection with a remittance
transfer. The proposed provision is similar to Sec. 205.11(a)(1)(ii),
which defines as an error an incorrect EFT to or from a consumer's
account. Proposed comment 33(a)-1 clarifies that this provision is
intended to cover circumstances in which the amount paid by the sender
differs from the total transaction amount stated in the receipt
provided under Sec. 205.31(b)(2) or the combined disclosure provided
under Sec. 205.31(b)(3). See also Sec. 205.31(b)(1)(iii).
Proposed comment 33(a)-1 also states that an error under Sec.
205.33(a)(1)(i) covers incorrect amounts paid by a sender regardless of
the form or method of payment tendered by the sender for the transfer,
including when a debit, credit, or prepaid card is used to pay an
amount in excess of the amount of the transfer requested by the
consumer plus applicable fees. For example, if a remittance transfer
provider incorrectly charged a sender's credit card account for $150 to
send $120 to the sender's relative in a foreign country, plus a
transfer fee of $10, and the provider sent only $120, the sender could
assert an error with the remittance transfer provider for the incorrect
charge. In addition, however, as discussed below under proposed Sec.
205.33(f), the right to assert an error with a remittance transfer
provider for incorrect amounts paid in connection with a transfer is
independent of any other existing rights that the sender may also have
under other applicable law with respect to an incorrect payment amount.
Proposed Sec. 205.33(a)(1)(ii) defines as an error ``a
computational or bookkeeping error made by a remittance transfer
provider relating to a remittance transfer.'' Similar to an existing
error provision for EFTs in Sec. 205.11(a)(iv), an error is intended
to include ``arithmetical errors, posting errors, errors in printing
figures, and figures that were jumbled due to mechanical or electronic
malfunction.'' See 44 FR 59480 (Oct. 15, 1979). The proposed error
would cover, for example, circumstances in which a remittance transfer
provider fails to reflect all fees that will be imposed in connection
with the transfer or misapplies the applicable exchange rate in
calculating the amount of currency that will be received by the
designated recipient. Thus, notwithstanding that the designated
recipient may receive the amount of currency stated on the receipt or
combined disclosure, an error could be asserted because the provider
incorrectly calculated the amount that should have been received.
Proposed Sec. 205.33(a)(1)(iii) provides that an error also
generally includes the failure by a remittance transfer provider to
make available to a designated recipient the amount of currency
identified in the receipt (or combined notice) given to the sender.
Proposed comment 33(a)-2 contains guidance regarding the scope of the
error under
[[Page 29928]]
Sec. 205.33(a)(1)(iii). For example, as discussed above under proposed
Sec. 205.31, the amount of currency to be received by the designated
recipient stated on the transfer receipt must accurately reflect any
third party fees or taxes that may be imposed in the course of the
remittance transfer (for example, fees imposed by the recipient agent
or bank in the foreign country or by an intermediary institution).
Accordingly, if the remittance transfer provider fails to account for
such third party fees or taxes, resulting in the designated recipient's
receipt of less than the amount disclosed on the transaction receipt,
the sender may assert an error (except in the case of an estimate). The
proposed definition would also cover circumstances in which the
remittance transfer provider initially transmits or sends an amount
that differs from the amount requested by the sender.
The proposed definition in Sec. 205.33(a)(1)(iii) does not,
however, apply to circumstances in which the amount received by a
designated recipient differs from the stated amount of currency where
the remittance transfer provider provides an estimate as permitted in
proposed Sec. 205.32, discussed above. For example, where the law in
the foreign country prohibits the remittance transfer provider from
offering a fixed currency exchange rate and the provider gives an
estimate of the currency to be received in compliance with Sec.
205.32(c), the fact that the designated recipient received less than
the estimated currency amount would not constitute an error under
proposed Sec. 205.33(a)(1)(iii).
Proposed comment 33(a)-3 provides examples illustrating
circumstances in which an incorrect amount of currency may be received
by a designated recipient.
Proposed Sec. 205.33(a)(1)(iv) generally treats as an error a
remittance transfer provider's failure to make funds in connection with
a remittance transfer available to the designated recipient by the date
of availability stated on the receipt (or combined disclosure). See
proposed Sec. 205.31(b)(2)(ii). Proposed comment 33(a)-4 provides
examples of the circumstances that would be errors. These circumstances
include the late delivery of a remittance transfer after the stated
date of availability or non-delivery of the transfer, and the deposit
of a remittance transfer to the wrong account. See, however, proposed
Sec. 205.33(a)(1)(iv)(B), discussed below. An error could also be
asserted if a recipient agent or institution retains the transferred
funds after the stated date of availability, rather than making the
funds available to the designated recipient.
In addition, an error under Sec. 205.33(a)(1)(iv) includes a
circumstance in which a person other than the person identified by the
sender as the designated recipient of the transfer fraudulently picks
up a remittance transfer in the foreign country. An error would not,
however, include circumstances in which a designated recipient picks up
a remittance transfer from the provider's agent as authorized, but
subsequently has the funds stolen from the recipient's possession.
The proposed approach with respect to the fraudulent pick-up of a
remittance transfer is consistent with the scope of unauthorized EFTs
under Sec. 205.2(m), which include unauthorized EFTs initiated through
fraudulent means. See comment 2(m)-3. Moreover, the Board believes it
is appropriate to treat these circumstances as errors under the
proposed rule because the remittance transfer provider, rather than the
sender, is in the best position to ensure that a remittance transfer is
picked up only by the person designated by the sender. For example, the
provider could establish appropriate policies and procedures for its
agents to verify the identity of the recipient of the transfer.
The proposed rule provides two exceptions to the definition of
error in Sec. 205.33(a)(1)(iv). First, under proposed Sec.
205.33(a)(1)(iv)(A), the failure to make funds from a remittance
transfer available by the stated date of availability does not
constitute an error where the failure resulted from circumstances
outside the remittance transfer provider's control. As clarified in
proposed comment 33(a)-5, the exception is limited to circumstances
that are generally referred to under contract law as force majeure, or
uncontrollable or extraordinary circumstances that cannot be reasonably
anticipated by the remittance transfer provider and that prevent the
provider from delivering a remittance transfer, such as war, civil
unrest, or a natural disaster. The exception for circumstances beyond a
provider's control also covers government actions or restrictions that
occur after the transfer has been sent but that could not have been
reasonably anticipated by the remittance transfer provider, such as the
imposition of foreign currency controls or the garnishment or
attachment of funds by a foreign government. Comment is requested
regarding whether additional examples or guidance is necessary to
illustrate the exception for circumstances outside the remittance
transfer provider's control.
Under proposed Sec. 205.33(a)(1)(iv)(B), the failure to make funds
from a remittance transfer available on the stated date of availability
does not constitute an error if it was caused by the sender providing
incorrect information in connection with the remittance transfer to the
provider. For example, a transfer may not be delivered by the stated
date of delivery as a result of the sender's provision of incorrect
information in connection with the transfer if the sender misspells the
recipient's name or otherwise incorrectly identifies the designated
recipient or account to which the transferred funds are to be
deposited. Under these circumstances, however, the provider must give
the sender the opportunity to correct the information and resend the
transfer at no additional cost in order to avoid triggering the error
resolution requirements.
The exception in Sec. 205.33(a)(1)(iv)(B) applies only where funds
from a transfer were not made available by the stated date of
availability as a result of incorrect information provided by the
sender. Accordingly, proposed comment 33(a)-6 clarifies that if the
failure to make funds from a transfer available by the stated date of
availability occurred due to the provider's miscommunication of
information necessary for the designated recipient to pick up the
transfer, such as providing the incorrect location where the transfer
may be picked up or providing the wrong confirmation number or code for
the transfer, such failure would be treated as an error under Sec.
205.33(a)(1)(iv).
Finally, proposed Sec. 205.33(a)(1)(v) includes as an error a
sender's request for documentation provided in connection with a
remittance transfer or additional information or clarification
concerning a remittance transfer. An error under proposed Sec.
205.33(a)(1)(v) would also cover a sender's request to determine
whether an error exists under the proposed errors discussed above under
proposed Sec. Sec. 205.33(a)(1)(i) through (a)(1)(iv). The proposal is
similar to an existing provision in Sec. 205.11(a)(1)(vii).
Proposed Sec. 205.33(a)(2) lists circumstances that do not
constitute errors. Under proposed Sec. 205.33(a)(2)(i), an inquiry
about a transfer of $15 or less does not constitute an error, since
these small-value transfers do not fall within the scope of the
definition of remittance transfer. See Sec. 205.30(d)(2), discussed
above. Proposed Sec. 205.33(a)(2)(ii) states that an inquiry about the
status of a remittance transfer--for example, if the sender calls to
ask whether the funds have been made available in the foreign
[[Page 29929]]
country--is not an error (unless the funds have not been made available
by the stated date of availability). Finally, proposed Sec.
205.33(a)(3)(iii) provides that the term ``error'' does not include a
sender's request for information for tax or other recordkeeping
purposes.
The Board solicits comment on all aspects of the proposed
definition of error in Sec. 205.33(a), including whether additional
circumstances should be treated as errors under the proposed rule and
whether additional examples of non-errors are necessary to provide
clarity.
33(b) Notice of Error From Sender
Proposed Sec. 205.33(b) sets forth the timing and content
requirements for a notice of error provided by a sender in connection
with a remittance transfer. Under proposed Sec. 205.33(b)(1)(i), a
sender must generally provide a notice of error orally or in writing to
the remittance transfer provider no later than 180 days after the date
of availability of the remittance transfer stated in the receipt (or
combined disclosure). See EFTA Section 919(d)(1)(A). Such notice of
error must be sufficient to enable the remittance transfer provider to
identify the sender's name and telephone number or address; the
recipient's name, and if known, the telephone number or address of the
recipient; and the remittance transfer to which the notice of error
applies. See proposed Sec. 205.33(b)(1)(ii). Except for requests for
documentation, additional information, or clarification under proposed
Sec. 205.33(a)(1)(v), the notice must also indicate why the sender
believes the error exists and include to the extent possible the type,
date, and amount of the error. See proposed Sec. 205.33(b)(1)(iii).
Proposed Sec. 205.33(b)(2) provides that when a notice of error is
based on documentation, additional information, or clarification that
the sender had previously requested under Sec. 205.33(a)(1)(v), the
sender's notice of error is timely if received by the provider no later
than 60 days after the provider sends the requested documentation,
information, or clarification. The proposed 60-day time frame for the
sender to provide a new notice of error following the sender's receipt
of documentation, information, or clarification from the remittance
transfer provider is consistent with the 60-day time frame established
for similar circumstances under the general error resolution provisions
in Regulation E, Sec. 205.11(b)(3). The Board believes that under
these circumstances, 60 days, rather than the 180-day error resolution
time frame generally applicable to remittance transfers, provides
sufficient time for a sender to review the additional information
provided by the remittance transfer provider and determine whether an
error occurred in connection with a transfer.
Proposed comment 33(b)-1 clarifies that the error resolution
procedures for remittance transfers apply only when a notice of error
is received from the sender of the transfer. Thus, under the proposed
rule, a notice of error provided by the designated recipient does not
trigger the remittance transfer provider's error resolution
obligations. This interpretation is consistent with EFTA Section
919(d)(1)(A), which establishes error resolution obligations for a
remittance transfer provider only when a notice is received from the
``sender.'' \37\ The proposed comment also clarifies that the error
resolution provisions do not apply when the remittance transfer
provider itself discovers and corrects an error.
---------------------------------------------------------------------------
\37\ See also EFTA Section 919(g)(1) (providing that a
designated recipient ``shall not be deemed to be a consumer for
purposes of this Act'').
---------------------------------------------------------------------------
Proposed comment 33(b)-2 provides that a notice of error is
effective so long as the remittance transfer provider is able to
identify the remittance transfer in question. For example, many
remittance transfer providers may use the confirmation number or code
given to the sender for the pick-up of a remittance transfer to
identify the particular transfer in their tracking systems and records.
In those circumstances, if a sender provides the confirmation number or
code in the notice of error, or any other identification number or code
supplied by the provider in connection with the remittance transfer,
such number or code should be sufficient to enable the provider to
identify the transfer. Proposed comment 33(b)-3 provides that a
remittance transfer provider may request, or the sender may provide, an
e-mail address of the sender or the designated recipient, as
applicable, instead of a physical address if the e-mail address would
be sufficient to enable the provider to identify the remittance
transfer to which the notice applies.
Proposed comment 33(b)-4 clarifies that if the sender fails to
provide a timely notice of error within 180 days from the stated date
of delivery, the remittance transfer provider is not required to comply
with the error resolution requirements set forth in the rule. See,
e.g., comment 11(b)(1)-7 (providing that a financial institution need
not comply with the error resolution provisions of Sec. 205.11 for
untimely notices of error).
In many cases, a sender that has a problem or issue with a
particular remittance transfer may contact the agent location that the
sender used to send the transfer to resolve the problem or issue,
rather than notifying the provider directly. Proposed comment 33(b)-5
states that a notice of error from a sender received by a remittance
transfer provider's agent is deemed to be received by the provider for
purposes of the 180-day time frame for reporting errors under proposed
Sec. 205.33(b)(1)(i). The Board believes that it is appropriate to
treat notices of error given to the agent as notice to the provider
because in most cases, it will be the agent with which the sender has
the direct relationship, and not the provider. In addition, treating a
notice of error given to the agent as notice to the provider ensures
that a sender does not lose his or her error resolution rights merely
because the sender was unaware of a need to directly notify the
provider.
Proposed comment 33(b)-6 cross-references the disclosure
requirements in proposed Sec. 205.31, discussed above, to reiterate
that a remittance transfer provider must include an abbreviated notice
of the consumer's error resolution rights on the receipt under Sec.
205.31(b)(2) or combined disclosure under Sec. 205.31(b)(3), as
applicable. In addition, the remittance transfer provider must make
available to a sender upon request, a notice providing a full
description of error resolution rights that is substantially similar to
the proposed model error resolution and cancellation notice set forth
in Appendix A of this regulation (Model Form A-36).
33(c) Time Limits and Extent of Investigation
EFTA Section 919(d)(1)(B) generally provides that a remittance
transfer provider must investigate and resolve an error not later than
90 days after receipt of a sender's timely notice of error. EFTA
Section 919(d)(1)(B) also specifies certain remedies for errors in
connection with a remittance transfer; however, the statute also
authorizes the Board to provide ``such other remedy'' as the Board
determines appropriate ``for the protection of senders.''
Proposed Sec. 205.33(c) implements the statutory time frame for
investigating errors and sets forth the procedures for resolving an
error, including the applicable remedies. Consistent with the statute,
proposed Sec. 205.33(c)(1) requires a remittance transfer provider to
promptly investigate a notice of error to determine whether an error
occurred
[[Page 29930]]
within 90 days of receiving the sender's notice.
Pursuant to the Board's authority under EFTA Section 904(a), the
proposed rule further requires the remittance transfer provider to
report the results to the sender within three business days after
completing its investigation, which is consistent with the time frame
for reporting the results of an error investigation under Regulation E,
Sec. 205.11(c)(2)(iv). The report or notice of results must also alert
the sender of any remedies available for correcting any error that the
provider determines has occurred.
Although EFTA Section 919(d)(1) does not expressly require a notice
to be provided to the sender when the provider determines that an error
has occurred, the Board believes that a notice is appropriate under
these circumstances to alert the sender of the results of the
investigation as well as to inform the sender of available remedies.
The proposed rule does not require a written notice to a sender that an
error occurred because such a requirement could unnecessarily delay a
sender's ability to receive an appropriate remedy. Accordingly,
proposed comment 33(c)-1 clarifies that if the error occurred as
described by the sender, the provider may inform the sender of its
findings either orally or in writing. However, if the error did not
occur as described, the remittance transfer provider must provide a
written notice of its findings under Sec. 205.33(d), discussed below.
Proposed Sec. 205.33(c)(2) establishes the procedures and remedies
for correcting an error. The proposed rule implements the two remedies
that are specified in the statute and adds a third remedy that would
apply if the transfer was not made available to the designated
recipient by the stated date of availability under proposed Sec.
205.33(a)(1)(iv). As in the statute, the proposed rule allows the
sender to designate the preferred remedy in the event of an error. See
EFTA Section 919(d)(1)(B). Under proposed Sec. 205.33(c)(2), the
sender could choose to obtain a full refund of the amount tendered
where the remittance transfer was not properly transmitted, or an
amount appropriate to resolve the error. Alternatively, the sender
could choose to have the remittance transfer provider send to the
designated recipient the amount appropriate to resolve the error, at no
additional cost to the sender or the designated recipient. See proposed
Sec. Sec. 205.33(c)(2)(i) and (ii).
In addition, if the remittance transfer was not sent or delivered
to the designated recipient by the stated date of availability, the
remittance transfer provider would be required to refund all fees
charged or imposed in connection with the transfer, even if the
consumer asks the provider to send the remittance transfer to the
designated recipient as the preferred remedy. See proposed Sec.
205.33(c)(2)(iii). The Board believes that requiring the provider to
refund all fees imposed in connection with the remittance transfer,
including the transfer fee, is appropriate under such circumstances
because the sender did not receive the contracted service, specifically
the availability of funds in connection with the transfer by the stated
date. Moreover, in some cases, the sender may have paid an additional
fee for expedited delivery of funds. See proposed comment 33(c)-4. Of
course, in the event that the funds have already been delivered to the
recipient, even if on an untimely basis, the sole remedy in such case
would be the refund of fees.
Under proposed Sec. 205.33(c)(2), the remittance transfer provider
must correct the error within one business day of, or as soon as
reasonably practicable after, receiving the sender's instructions
regarding the appropriate remedy. The Board expects that in most cases,
a remittance transfer provider will correct an error in accordance with
the sender's instructions within one business day of receiving the
instructions. However, the proposed rule provides additional
flexibility to address the limited circumstances where the particular
method of sending a remittance transfer may present practical
impediments to a provider's ability to correct an error within one
business day. For example, as discussed above, a wire transfer sent
internationally may go through several intermediary institutions before
getting to the designated recipient. In such cases, it may not be
practicable to make the amount in error available to the recipient
within one business day in accordance with a sender's request. The
Board solicits comment on whether the proposed time frame for
correcting an error under Sec. 205.33(c)(2) is appropriate.
Proposed comment 33(c)-2 clarifies that the remittance transfer
provider may request that the sender designate the preferred remedy at
the time the sender provides notice of error. Permitting such requests
may enable providers to process error claims more expeditiously without
waiting for the sender's subsequent instructions after notifying the
sender of the results of the investigation. Nonetheless, if the sender
does not indicate the desired remedy at the time of providing a notice
of error, the provider would still be required to notify the sender of
any available remedies in the report provided under Sec. 205.33(c)(1)
if the provider determines an error occurred. See proposed comment
33(c)-2.
The Board notes that under the statute and proposed rule, a
provider may be unable to promptly correct an error if the consumer
fails to designate an appropriate remedy either at the time of
providing the notice of error or in response to the provider's notice
informing the consumer of its error determination and available
remedies. Comment is requested on whether the Board should
alternatively permit remittance transfer providers to select a default
method of correcting errors, provided that the sender retains the
option of selecting a different remedy if appropriate. For example, a
sender could choose to automatically refund to senders any amounts
necessary to correct the error, but each sender could decide in an
individual case to decline the refund and instead request that the
provider deliver the appropriate amount to the designated recipient.
Proposed comment 33(c)-3 provides additional guidance regarding the
appropriate remedies where the sender has paid an excess amount to send
a remittance transfer. Under that circumstance, the sender may request
a refund of the amount paid in excess or may request that the
remittance transfer provider make that excess amount available to the
designated recipient at no additional cost. Proposed comment 33(c)-4
states that fees that must be refunded to a sender for a failure to
make funds from a remittance transfer available by the stated date of
availability under Sec. 205.33(a)(1)(iv) include all fees imposed for
the transfer, regardless of the party that imposed the fee, and are not
limited to fees imposed by the provider.
Proposed comment 33(c)-5 clarifies that if an error occurred,
whether as alleged or in a different amount or manner, a remittance
transfer provider may not impose any charges related to any aspect of
the error resolution process, including any charges for documentation
or investigation. The Board is concerned that such fees or charges
might have a chilling effect on a sender's good faith assertion of
errors. See, e.g., comment 11(c)-3. Nothing in this proposed rule,
however, would prohibit a remittance transfer provider from imposing a
fee for making copies of documentation for non-error-resolution related
purposes, such as for tax documentation purposes. See, e.g., proposed
Sec. 205.33(a)(2)(iii).
Under proposed comment 33(c)-6, a remittance transfer provider may
correct an error, without further investigation,
[[Page 29931]]
in the amount or manner alleged by the sender to be in error. However,
the provider must otherwise comply with all other applicable
requirements of Sec. 205.33, including providing notice of the
resolution of the error under Sec. 205.33(c). See, e.g., comment
11(c)-4.
33(d) Procedures if Remittance Transfer Provider Determines No Error or
Different Error Occurred
Proposed Sec. 205.33(d) establishes procedures in the event that a
remittance transfer provider determines that no error or a different
error occurred from that described by the sender. Consistent with EFTA
Section 919(d)(1)(B)(iv), proposed Sec. 205.33(d)(1) would require the
remittance transfer provider to provide a written explanation of the
provider's finding that there was no error or that a different error
occurred. Such explanation must respond to the sender's specific
complaint and note the sender's right to request the documents that the
provider relied on in making its determination. Proposed Sec.
205.33(d)(2) further states that upon the sender's request, the
remittance transfer provider must promptly provide copies of such
documentation.
Proposed comment 33(d)-1 states that where a remittance transfer
provider determines that an error occurred in a manner or amount
different from that described by the sender, the provider must comply
with applicable provisions of both Sec. 205.33(c) and (d). The
proposed commentary also clarifies that in such case, the provider may
choose to give the notice of correction of error under Sec.
205.33(c)(1) and the explanation that a different error occurred under
Sec. 205.33(d) separately or in a combined form. See, e.g., comment
11(d)-1 (establishing a similar provision for error investigations
involving EFTs).
33(e) Reassertion of Error
Under proposed Sec. 205.33(e), a remittance transfer provider that
has fully complied with the error resolution requirements with respect
to a particular notice of error has no further responsibilities in the
event the sender later reasserts the same error, except in the case of
an error asserted following the sender's receipt of information
provided under Sec. 205.33(a)(1)(v). Proposed comment 33(e)-1
clarifies that the remittance transfer provider has no further error-
resolution responsibilities if the sender voluntarily withdraws the
notice alleging an error. In such case, however, the sender retains the
right to reassert the allegation within the original 180-day period
from the stated date of availability unless the remittance transfer
provider had already complied with all of the error resolution
requirements before the allegation was withdrawn. The proposed
provision and comment are modeled on similar provisions under Sec.
205.11(e). Comment is requested on whether additional guidance is
necessary regarding the circumstances in which a sender has
``voluntarily withdrawn'' a notice of error.
33(f) Relation to Other Laws
As noted above under Sec. 205.33(a)(1)(i), the error resolution
rights for remittance transfers exist independently from other rights
that a consumer may have under other existing federal law. For example,
when a sender uses a credit card to pay for a remittance transfer, the
sender may have billing error rights under Regulation Z, 12 CFR 226.13,
with respect to the extension of credit if there is an incorrect amount
charged to the consumer's account for the transfer, in addition to the
error resolution rights the sender may assert against the remittance
transfer provider. Similarly, a sender may use a debit card to pay for
a remittance transfer and thus may have error resolution rights with
respect to both the remittance transfer provider and the account-
holding institution. Proposed Sec. 205.33(f) contains guidance
regarding the interplay between the error resolution provisions for
remittance transfers and error resolution rights that may exist under
other applicable consumer financial protection laws.
In most cases when a consumer pays for a remittance transfer by
means of an electronic fund transfer from his or her checking or
savings account (for example, by providing a debit card as payment or
authorizing an ACH transfer from the account), the institution
providing the remittance transfer service will not be the same
institution that holds the debited account. If, however, the sender
uses his or her bank or credit union to send a remittance transfer via
an international ACH service, the account-holding bank or credit union
would also be the remittance transfer provider. In such case, a
potential conflict arises between the error resolution time frames and
procedures that would apply under EFTA Section 908, implemented in
Sec. 205.11, and the error resolution provisions under this proposed
rule. For example, under Sec. 205.11(c), a financial institution
generally has 10 business days to investigate a consumer's notice of
error (and up to 45 calendar days if provisional credit is provided).
However, under EFTA Section 919(d)(1)(B) and proposed Sec. 205.33(c),
discussed above, a remittance transfer provider has up to 90 calendar
days to investigate a sender's notice of error. EFTA Section 919(e)(1)
provides that under these circumstances--that is, where a remittance
transfer is also an electronic fund transfer--the error resolution
provisions for remittance transfers apply to the institution/provider,
rather than the error resolution provisions generally applicable to
EFTs.
Proposed Sec. 205.33(f)(1) implements EFTA Section 919(e)(1)'s
conflict of law provision. The proposed rule provides that if an
alleged error in connection with a remittance transfer involves an
incorrect EFT to a sender's account and the account is also held by the
remittance transfer provider, then the requirements of Sec. 205.33,
and its applicable time frames and procedures, govern the error
resolution process. However, proposed Sec. 205.33(f)(1) further
provides that if the notice of error is asserted with an account-
holding institution that is not the same entity as the remittance
transfer provider, the error resolution procedures under Sec. 205.11,
and not those under Sec. 205.33, apply to the account-holding
institution's investigation of the alleged error. In both cases, the
electronic fund transfer from a consumer's account may also be a
remittance transfer. Nonetheless, the Board believes that as a
practical matter, an account-holding institution would be unable to
identify a particular EFT as a remittance transfer unless it was also
the remittance transfer provider. In the absence of direct knowledge
that a particular EFT was used to fund a remittance transfer, the
account-holding institution would face significant compliance risk if
the error resolution requirements under proposed Sec. 205.33 were
deemed to apply to the error. The Board does not believe such an
outcome is desirable. Accordingly, proposed Sec. 205.33(f)(1) permits
an account-holding institution to comply with the error resolution
requirements of Sec. 205.11 when the institution is not also the
remittance transfer provider for the transaction in question. Of
course, the consumer still has independent error resolution rights
against the remittance transfer provider itself under proposed Sec.
205.33.
Proposed comment 33(f)-1 clarifies that the guidance in Sec.
205.33(f)(1) applies only when an error could be asserted under both
Sec. Sec. 205.11 and 205.33 with a financial institution that is also
the remittance transfer provider. For example, the proposed comment
provides that if the sender asserted an error under Sec. 205.11 with a
remittance
[[Page 29932]]
transfer provider that holds the sender's account, and the error was
not also an error under Sec. 205.33 (such as in the case of an
omission of an EFT on a periodic statement), then the error-resolution
provisions of Sec. 205.11 would exclusively apply to the error.
Proposed Sec. 205.33(f)(2) addresses circumstances where an
alleged error involves an incorrect extension of credit in connection
with a remittance transfer, such as when a consumer provides a credit
card to pay for a remittance transfer. If the consumer provides a
notice of error to the creditor that issued the credit card, the
provisions of Regulation Z, 12 CFR 226.13, governing error resolution
apply to the creditor, rather than the requirements under Sec. 205.33.
However, if the sender instead provides a notice of error asserting an
incorrect payment amount involving the use of a credit card to the
remittance transfer provider, then the error-resolution provisions of
Sec. 205.33 apply to the remittance transfer provider.
In certain circumstances, the creditor issuing a credit card may
also act as a remittance transfer provider, for example, when the
cardholder sends funds from his or her credit card through a service
offered by the creditor to a recipient in a foreign country. In the
case of an incorrect extension of credit in connection with the
transfer, an error could potentially be asserted under either
Regulation Z or the error resolution provisions applicable to
remittance transfers in proposed Sec. 205.33. The proposed rule
provides that under these circumstances, the error resolution
provisions under Regulation Z Sec. 226.13 would apply to the alleged
error. Under these circumstances, the Board believes it is reasonable
to apply the Regulation Z error resolution provisions because 12 CFR
226.13(d)(1) permits a consumer to withhold disputed amounts while an
error is being investigated. Nonetheless, the Board notes that if the
error resolution provisions under proposed Sec. 205.33 were instead
deemed to apply to the error, then a sender would have 180 days from
the stated date of availability for the transfer to assert a notice of
error, rather than 60 days from the periodic statement reflecting the
error. Accordingly, because the error resolution provisions under 12
CFR 226.13 and proposed Sec. 205.33 each provide greater protection to
consumers in different respects, the Board solicits comment on the
appropriate standard to apply when an error for an incorrect amount
paid arises in connection with a remittance transfer sent by a
creditor. Proposed Sec. 205.33(f)(3) provides guidance where a person
makes an unauthorized EFT or unauthorized use of a credit card to send
a remittance transfer, such as when a stolen debit or credit card is
used to send funds to a foreign country. Under such circumstances, the
consumer holding the asset account or the credit card account is not
the sender of the remittance transfer, and thus the error resolution
provisions under Sec. 205.33 do not apply. See proposed comment 33(b)-
1. However, proposed Sec. 205.33(f)(3) clarifies that the consumer
retains existing rights under Regulation E Sec. Sec. 205.6 and 205.11
in the case of an unauthorized EFT and Regulation Z Sec. Sec.
226.12(b) and 226.13 in the case of an unauthorized use of a credit
card.
As discussed above, in certain cases a consumer may be able to
assert error resolution rights in connection with a remittance transfer
with both the remittance transfer provider as well as his or her
account-holding institution or credit card issuer or creditor.
Nonetheless, the Board does not believe that a consumer should be able
to receive a windfall that could otherwise arise if the consumer were
to successfully assert an error with both the provider and the account-
holding institution and/or credit card issuer or creditor. Accordingly,
proposed comment 33(f)-2 clarifies that if a sender receives credit to
correct an error of an incorrect amount paid in connection with a
remittance transfer from either the remittance transfer provider or the
sender's account-holding institution (or creditor), and then
subsequently asserts the same error with the other party, the other
party has no further responsibilities to investigate the error. In such
case, the sender has already received sufficient credit to correct the
error, thereby extinguishing the second party's error resolution
obligations. The proposed comment also clarifies that nothing in this
section prevents an account-holding institution or creditor from
reversing amounts it has previously credited to correct an error if the
consumer receives more than one credit to correct the same error. For
example, assume that a sender concurrently files notices of error with
his or her account-holding institution and remittance transfer provider
for the same error, and the sender receives credit from the account-
holding institution for the error. If the remittance transfer provider
subsequently provides a credit to the sender for the same error, the
account-holding institution may reverse the amounts it had previously
credited to the consumer's account even after the 45-day error
resolution period set forth in Sec. 205.11.
33(g) Error Resolution Standards and Recordkeeping Requirements
EFTA Section 919(d)(2) directs the Board to establish clear and
appropriate standards for remittance transfer providers with respect to
error resolution relating to remittance transfers, to protect senders
from such errors. The statute specifically provides that such standards
must include appropriate standards regarding recordkeeping, including
retention of certain error-resolution related documentation. Proposed
Sec. 205.33(g) implements the new requirements regarding error
resolution standards and recordkeeping requirements.
Proposed Sec. 205.33(g)(1) provides that a remittance transfer
provider must develop and maintain written policies and procedures that
are designed to ensure compliance with respect to the error resolution
requirements applicable to remittance transfers under Sec. 205.33. The
proposed rule would also require remittance transfer providers to take
steps to ensure that whenever a provider uses an agent to perform any
of the provider's error resolution obligations, the agent conducts such
activity in accordance with the provider's policies and procedures.
This approach is similar to one taken by the federal banking agencies
in other contexts. See, e.g., 12 CFR 222.90(e) (requiring that an
identity theft red flags program exercise appropriate and effective
oversight of service-provider arrangements).
Proposed Sec. 205.33(g)(2) provides that the remittance transfer
provider's policies and procedures concerning error resolution must
include provisions regarding the retention of documentation related to
an error investigation. Consistent with the statute, such provisions
must ensure, at a minimum, the retention of any notices of error
submitted by a sender, documentation provided by the sender to the
provider with respect to the alleged error, and the findings of the
remittance transfer provider regarding the investigation of the alleged
error. See EFTA Section 919(d)(2).
Proposed comment 33(g)-1 states that remittance transfer providers
are subject to the record retention requirements under Sec. 205.13,
which apply to ``any person subject to the [EFTA].'' Accordingly,
remittance transfer providers must retain documentation, including
documentation related to error investigations, for a period of not less
than two years from the date a notice of error was submitted to the
provider or action was required to be
[[Page 29933]]
taken by the provider. However, the proposed comment further clarifies
that the record retention requirements do not require a remittance
transfer provider to maintain records of individual disclosures of
remittance transfers that it has provided to each sender. Instead, a
provider need only retain records to ensure that it can comply with a
sender's request for documentation or other information relating to a
particular remittance transfer under Sec. 205.33(a)(1)(v), including a
request for supporting documentation to enable the sender to determine
whether an error exists with respect to that transfer.
Section 205.34 Procedures for Cancellation and Refund of Remittance
Transfers
EFTA Section 919(d)(3) directs the Board to issue final rules
regarding appropriate remittance transfer cancellation and refund
policies for consumers within 18 months of the date of enactment of the
Dodd-Frank Act. Proposed Sec. 205.34 establishes new cancellation and
refund rights for senders of remittance transfers as required by the
Dodd-Frank Act.
34(a) Sender Right of Cancellation and Refund
Under proposed Sec. 205.34(a), a remittance transfer provider must
comply with a sender's oral or written request to cancel a remittance
transfer received no later than one business day from when the sender
makes payment in connection with the remittance transfer provider. In
determining the appropriate minimum time period for cancelling a
remittance transfer, the Board considered a number of factors. Through
its outreach, the Board understands that some remittance transfer
providers permit a sender to cancel a remittance transfer and obtain a
full refund of all funds tendered at any time so long as the transfer
has not been picked up in the foreign country by the recipient or
deposited into the recipient's account.
In contrast, however, remittance transfers sent by ACH or wire
transfer generally cannot be cancelled once the payment order has been
accepted by the sending institution. See, e.g., UCC Article 4A-211
(providing that a payment order cannot be cancelled or amended once it
has been accepted unless the receiving bank agrees or a funds-transfer
system rule allows cancellation or amendment without agreement of the
bank). Thus, a prolonged cancellation period would present significant
practical difficulties for remittance transfers sent by ACH and wire
transfer. Under such circumstances, the bank or credit union would
likely wait to execute the payment order until the cancellation period
has passed, which could further delay the receipt of the funds in the
foreign country.
The Board also considered time frames for cancellation established
under state laws applicable to remittance transfers, or money transfers
more generally. See, e.g., TX Admin. Code Sec. 278.052 (providing that
a consumer may cancel a transfer for any reason within 30 minutes of
initiating the transfer provided the customer has not left the
premises). Finally, during the Board's consumer testing, a few of the
participants that believed that they had a right to cancel a remittance
transfer expected that they would have to exercise their right to
cancel the same day they requested the transfer be sent. For these
reasons, the Board believes that one business day provides a reasonable
time frame for a sender to evaluate whether to cancel a remittance
transfer after providing payment for the transfer. Nothing in the
proposed rule, however, prohibits remittance transfer providers from
offering longer cancellation time frames to senders. Comment is
requested regarding whether the proposed minimum time period should be
longer or shorter than proposed.
The proposed rule contains two conditions on the right to cancel.
First, under proposed Sec. 205.34(a)(1), a valid request to cancel a
remittance transfer must enable the provider to identify the sender's
name and address or telephone number and the particular transfer to be
cancelled. Proposed comment 34(a)-1 clarifies that the request to
cancel a remittance transfer is valid so long as the remittance
transfer provider is able to identify the remittance transfer in
question. For example, the sender could provide the confirmation number
or code that would be used by the designated recipient to pick up the
transfer, or other identification number or code supplied by the
provider in connection with the transfer. The proposed comment also
permits the provider to request, or the sender to provide, the sender's
e-mail address instead of a physical address, so long as the provider
can identify the transfer to which the cancellation request applies.
Second, proposed Sec. 205.34(a)(2) provides that a sender's timely
request to cancel a remittance transfer is effective so long as the
transferred funds have not been picked up by the designated recipient
or deposited into an account held by the recipient.\38\
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\38\ Such accounts need not be accounts held by a financial
institution so long as the recipient may access the transferred
funds without any restrictions regarding the use of such funds. For
example, some Internet-based providers may track consumer funds in a
virtual account or wallet and permit the holder of the account or
wallet to make purchases or withdraw funds once funds are credited
to the account or wallet.
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Proposed comment 34(a)-2 cross-references the disclosure
requirements in proposed Sec. 205.31 to reiterate that a remittance
transfer provider must include an abbreviated notice of the sender's
right to cancel a remittance transfer in the receipt or combined pre-
payment notice, as applicable. In addition, the remittance transfer
provider must make available to a sender upon request, a notice
providing a full description of the right to cancel a remittance
transfer that is substantially similar to the proposed model error
resolution and cancellation notice set forth in Appendix A of this
regulation (Model Form A-36).
34(b) Time Limits and Refund Requirements
Proposed Sec. 205.34(b) establishes the time frames and refund
requirements applicable to remittance transfer cancellation requests.
The proposed rule requires a remittance transfer provider to refund, at
no additional cost to the sender, the total amount of funds tendered by
the sender in connection with the remittance transfer, including any
fees imposed in connection with the requested transfer, within three
business days of receiving the sender's valid cancellation request. The
Board believes that three business days provides sufficient time for a
remittance transfer provider to determine whether a remittance transfer
has been picked up in the foreign country or deposited into the
recipient's account. Comment is requested regarding the appropriate
time period for providing a refund following a sender's request for
cancellation.
Proposed comment 34(b)-1 clarifies that a remittance transfer
provider may, at the provider's discretion, issue a refund in cash or
in the same form of payment that was initially tendered by the sender
for the remittance transfer. For example, if the sender originally
provided a credit card as payment for the transfer, the remittance
transfer provider may issue a credit to the sender's credit card
account in the amount of the payment.
Proposed comment 34(b)-2 addresses fees that must be refunded upon
a sender's timely request to cancel a
[[Page 29934]]
remittance transfer. Under the proposed comment, the remittance
transfer provider must refund all funds tendered by the sender in
connection with the remittance transfer, including any fees that have
been imposed for the transfer, regardless of whether the provider or a
third party, such as an intermediary institution, imposed the fee.
The Board solicits comment on any and all aspects of the proposed
right to cancel a remittance transfer.
Section 205.35 Acts of Agents
In most cases, remittance transfers are sent through an agent of
the remittance transfer provider, such as a convenience store that has
contracted with the provider to offer remittance transfer services at
that location. EFTA Section 919(f)(1) generally makes remittance
transfer providers liable for any violation of EFTA Section 919 by an
agent, authorized delegate, or person affiliated with such provider,
when such agent, authorized delegate, or affiliate acts for that
remittance transfer provider. EFTA Section 919(f)(2) requires the Board
to prescribe rules to implement appropriate standards or conditions of
liability of a remittance transfer provider, including one that acts
through its agent or authorized delegate.\39\
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\39\ See proposed Sec. 205.30(a), which defines the term agent
for purposes of the proposed rule.
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The Board is proposing two alternatives to implement EFTA Section
919(f) with respect to acts of agents. Under the first alternative, a
remittance transfer provider would be strictly liable for violations by
an agent when such agent acts for the provider. Under the second
alternative, a remittance transfer provider would not be liable under
the EFTA for violations by an agent acting for the provider where the
provider establishes and maintains policies and procedures for agent
compliance, including appropriate oversight measures, and the provider
corrects any violation, to the extent appropriate. The Board solicits
comment on both alternatives.
Alternative A
EFTA Section 919(f)(1) states that remittance transfer providers
are liable for any violation of EFTA Section 919 by an agent,
authorized delegate, or person affiliated with such provider, when such
agent, authorized delegate, or affiliate acts for that remittance
transfer provider. Under Alternative A, proposed Sec. 205.35 provides
that a remittance transfer provider is liable for any violation of
Subpart B by an agent when such agent acts for the provider. Some
agents have a non-exclusive arrangement with several remittance
transfer providers, so that a sender may choose from among the
remittance transfer providers at that location. If a sender chooses to
use Provider A to send funds at the agent location, then Provider B
would not be liable for the agent's actions in that instance because
the agent would be acting for Provider A.
Proposed comment 35-1 explains that remittance transfer providers
remain fully responsible for complying with the requirements of this
subpart, including, but not limited to, providing the disclosures set
forth in proposed Sec. 205.31 and remedying any errors as set forth in
proposed Sec. 205.33. This is the case even if a remittance transfer
provider performs its functions through an agent, and regardless of
whether the provider has an agreement with a third party that transfers
or otherwise makes funds available to a designated recipient.
The approach set forth in Alternative A is consistent with EFTA
Section 919(f)(1), as well as the approach generally taken in other
Board regulations, including Regulation E. For example, under
Regulation E's payroll card rules, a financial institution is required
to provide initial payroll card disclosures to a payroll account
holder. If, by contractual agreement with the institution, a third-
party service provider or the employer agrees to deliver these
disclosures on the institution's behalf and fails to do so, the issuing
financial institution is nonetheless liable for the violation.\40\
Similarly, if an agent at a retail establishment fails to provide the
disclosures required by proposed Sec. 205.31, under the proposed rule,
the remittance transfer provider would be liable.
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\40\ 12 CFR 205.18. See 71 FR 51437, 51441-42 (August 30, 2006)
(``In many cases, the depository institution may use a third-party
service provider to perform some or a substantial proportion of the
compliance duties (e.g., in a turnkey arrangement), including
mailing account terms and conditions and providing error resolution
services''; ``[P]ayroll card account holders will, at a minimum, be
able to assert their Regulation E rights against the depository
institution holding their account in all cases * * *'').
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Even where there is no contractual relationship between a provider
and an agent, the proposed rule by its terms requires the remittance
transfer provider to make accurate, timely disclosures and to provide
error resolution rights to the sender. See, e.g., proposed Sec.
205.31(b). A remittance transfer provider may not always have a
contractual relationship with the location that is making funds
available or depositing funds into the recipient's account. For
example, a financial institution that sends a wire transfer may not
have a correspondent relationship or other contractual privity with an
institution abroad where the wire transfer is deposited. Nonetheless,
if the amount of currency paid to the designated recipient is reduced
by an intermediary institution's fee, such that the amount disclosed by
the remittance transfer provider (or its agent) is no longer accurate,
the remittance transfer is responsible for providing the appropriate
remedy under proposed Sec. 205.33. See proposed Sec.
205.33(a)(1)(iii).
Alternative B
Remittance transfer providers have expressed concern that, under a
strict liability approach, they may be held responsible for their
agents' failure to comply with the statute despite the provider's best
efforts to monitor and train their agents. As noted previously, the
majority of senders send remittances through money transmitters at
agent locations. Some providers have a network of thousands, or in some
cases, hundreds of thousands of agent locations worldwide to oversee,
making frequent on-site inspection of each location impracticable.
Providers have expressed particular concern about administrative and
civil liability under the EFTA for a single agent's non-compliance.
Alternative B recognizes the unique position of agents in the
remittance transfer model, while still making an individual consumer
whole for any problems experienced with the remittance transfer. Under
Alternative B, proposed Sec. 205.35 provides that a remittance
transfer provider is liable for any violation of Subpart B by an agent
when such agent acts for that provider, unless it meets two conditions.
The first condition is that the remittance transfer provider must
establish and maintain written policies and procedures designed to
assure compliance with Subpart B by an agent, including policies,
procedures and other appropriate oversight measures. See proposed Sec.
205.35(a). The second condition is that the remittance transfer
provider must correct the violation to the extent appropriate,
including complying with the error resolution procedures set forth in
proposed Sec. 205.33 and providing the sender the remedies set forth
in proposed Sec. 205.33(c)(2). See proposed Sec. 205.35(b). A
remittance transfer provider that meets these two conditions would not
be liable for the acts of its agents. Alternative B is proposed
consistent with the Board's authority under EFTA
[[Page 29935]]
Section 919(f)(2) to prescribe rules to implement appropriate standards
or conditions of liability of a remittance transfer provider, including
one that acts through its agent or authorized delegate.
Proposed comment 35-1 states that remittance transfer providers
generally remain fully responsible for complying with the requirements
of Subpart B, including but not limited to providing the disclosures
set forth in proposed Sec. 205.31 and remedying any errors as set
forth in proposed Sec. 205.33. As in Alternative A, this is the case
even if a remittance transfer provider performs its functions through
an agent or other person, and regardless of whether the provider has an
agreement with a third party that transfers or otherwise makes funds
available to a designated recipient.
Proposed comment 35-2 provides further guidance on proposed Sec.
205.35(a)(1). The proposed comment states that a remittance transfer
provider must establish and maintain written policies and procedures
for compliance with Subpart B applicable to its agents. Maintenance of
policies and procedures includes periodic updates to and administration
of such policies and procedures, including appropriate oversight over
agents. Further, appropriate oversight measures include regular audits,
training, and other measures designed to ensure an agent's compliance
with Subpart B. Under these circumstances, a provider will not be
liable if an agent fails to follow the policies and procedures in an
individual case, and so long as the remittance transfer provider makes
the consumer whole for any error resulting from an agent's acts,
including as set forth under the error resolution provisions in
proposed Sec. 205.33.
Appendix A--Model Disclosure Clauses and Forms
The proposal would add to Appendix A twelve model forms that a
remittance transfer provider may use in connection with remittance
transfers. Proposed Model Forms A-30 through A-41 are intended to
demonstrate several formats a remittance transfer provider may use to
comply with the disclosure requirements of proposed Sec. 205.31. The
Board is proposing model forms pursuant to its authority under EFTA
section 904(a), rather than model clauses pursuant to its authority
under EFTA section 904(b), in order to clearly demonstrate the general
form and specific format requirements of Sec. 205.31(a) and (c).
Proposed Model Forms A-30 through A-32 were developed in consumer
testing and reflect a format in which the flow and organization of
information effectively communicates the remittance disclosures to most
consumers.
The proposed rule amends instruction 2 to Appendix A regarding the
use of model forms, which currently only references financial
institutions and electronic fund transfers. The instruction is proposed
to be revised to include references to remittance transfer providers
and remittance transfers. The proposed instruction also updates the
numbering of the liability provisions of the EFTA as sections 916 and
917. Thus, the proposed instruction clarifies that the use of the
proposed model forms in making disclosures would protect a remittance
transfer provider from liability under sections 916 and 917 of the EFTA
if they accurately reflect the provider's remittance transfer services.
The proposal also adds instruction 4 to Appendix A to describe how
a remittance transfer provider may properly use and alter the model
forms. Proposed instruction 4 to Appendix A explains that Model Forms
A-30 through A-32 demonstrate how a provider could provide the required
disclosures for a remittance transfer exchanged into local currency.
Proposed Model Forms A-33 through A-35 demonstrate how a provider could
provide the required disclosures for U.S. dollar-to-U.S. dollar
remittance transfers. Proposed instruction 4 states that these forms
also demonstrate disclosure of the required content, in accordance with
the grouping and proximity requirements of Sec. 205.31(c)(1) and (2),
in both a register receipt format (as developed in consumer testing)
and an 8.5 inch by 11 inch format. Proposed Model Form A-36 provides
long-form model error resolution and cancellation disclosures in
connection with Sec. 205.31(d), and Model Form A-37 provides short-
form model error resolution and cancellation disclosures in connection
with Sec. 205.31(b)(2)(iv).
Proposed instruction 4 to Appendix A also explains that a
remittance transfer provider could use the language and formatting
provided in proposed Forms A-37 through A-41 for disclosures that are
required to be provided in Spanish, pursuant to the requirements of
proposed Sec. 205.31(g). The Board understands that the majority of
remittance transfers from the United States are sent to Mexico and the
Caribbean, Central America, and South America.\41\ Spanish is the
primary language in many of the countries in these regions, so many
senders of remittance transfers that remit funds to the countries in
these regions speak Spanish. Therefore, the Board believes that it is
appropriate to provide model disclosures in Spanish to facilitate
compliance. The Board requests comment on the provision of Spanish
language disclosures, including whether the language used in the
Spanish translation would effectively communicate the remittance
transfer disclosures to Spanish-speaking consumers.
---------------------------------------------------------------------------
\41\ See GAO Report at 7 (Nov. 2005).
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The Board recognizes that disclosures may be required to be
provided in languages other than English and Spanish. Nonetheless, the
Board believes it would be impracticable to provide model forms in
every possible language in which remittance transfer disclosures may be
provided.
Proposed instruction 4 to Appendix A clarifies that the model forms
may contain information that is not required by Subpart B, such as a
confirmation code and the sender's name and contact information. The
additional information not required by Subpart B is included on the
model form to demonstrate one way of displaying this information in
compliance with Sec. 205.31(c)(4). The proposed instruction clarifies
that any additional information must be presented consistent with a
remittance transfer provider's obligation to provide required
disclosures in a clear and conspicuous manner.
Proposed instruction 4 to Appendix A further clarifies that use of
the model forms is optional. A remittance transfer provider may change
the forms by rearranging the format or by making modifications to the
language of the forms, without modifying the substance of the
disclosures. Proposed instruction 4 to Appendix A clarifies that
rearrangement or modification of the format of the model forms is
permissible, as long as it is consistent with the form, grouping,
proximity, and other requirements of Sec. 205.31(a) and (c). The
proposed instruction states that providers making revisions that do not
comply with this section will lose the benefit of the safe harbor for
appropriate use of proposed model forms A-30 to A-41. The Board
recognizes that many remittance transfer providers currently provide
disclosures in a variety of forms. The Board intends to provide
flexibility to remittance transfer providers in developing disclosure
forms that comply with the proposed rule.
Proposed instruction 4 to Appendix A also provides examples of
permissible changes a remittance transfer provider may make to the
language and format of the model forms without losing the benefit of
the safe harbor. The proposed
[[Page 29936]]
instruction clarifies that a remittance transfer provider could
substitute the information entered into the model forms that is
intended to demonstrate how to complete the information in the model
forms--such as names, addresses, and Web sites; dates; numbers; and
state-specific contact information--with information applicable to the
remittance transfer. A remittance transfer provider could also
eliminate disclosures that are not applicable to the transfer, as
permitted under proposed Sec. 205.31(b), or provide the required
disclosures on a paper size that is different from a register receipt
and 8.5 inch by 11 inch formats. The proposed instruction also
clarifies that a remittance transfer provider could correct or update
telephone numbers, mailing addresses, or Web site addresses that may
change over time. This instruction applies to all telephone numbers and
addresses on a model form, including the contact information of the
provider, the state agency, and the Consumer Financial Protection
Bureau. The proposed instruction also clarifies that a provider could
provide the required disclosures in a foreign language, or multiple
foreign languages, subject to the requirements of proposed Sec.
205.31(g), without losing the benefit of the safe harbor.
The proposed comment also clarifies that an impermissible change
would be adding language to a form that is not segregated from the
required disclosures, other than as permitted by Sec. 205.31(c)(4).
Proposed instruction 4 to Appendix A further clarifies that adding
the term ``Estimated'' or a substantially similar term and in close
proximity to the estimated term or terms, as permitted under proposed
Sec. 205.31(d), is a permissible change to the model forms. The Board
is not proposing separate forms that demonstrate how estimated content
would be presented on the forms, because the disclosures will be the
same as the proposed model forms, except for the disclosures that
certain information is estimated. The general form and specific
formatting will be the same on forms that include estimates as they are
in the model forms that are provided.
VI. Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (``RFA'')
generally requires an agency to publish an initial regulatory
flexibility analysis with a proposed rule whenever the agency is
required to publish a general notice of proposed rulemaking for a
proposed rule. The Board requests public comment on the following areas
in connection with its initial regulatory flexibility analysis. The
Board will conduct a final regulatory flexibility analysis after
considering the comments received during the public comment period.
1. Statement of the need for, and objectives of, the proposed rule.
The EFTA, as amended by the Dodd-Frank Act, was enacted to provide a
basic framework establishing the rights, liabilities, and
responsibilities of participants in electronic fund and remittance
transfer systems. The primary objective of the EFTA is the provision of
individual consumer rights. 15 U.S.C. 1693. The EFTA authorizes the
Board to prescribe regulations to carry out the purpose and provisions
of the statute. 15 U.S.C. 1693b(a). The EFTA expressly states that the
Board's regulations may contain ``such classifications,
differentiations, or other provisions . . . as, in the judgment of the
Board, are necessary or proper to effectuate the purposes of [the
EFTA], to prevent circumvention or evasion [of the EFTA], or to
facilitate compliance [with the EFTA].'' 15 U.S.C. 1693b(c).
The Board is proposing revisions to Regulation E to implement
Section 1073 of the Dodd-Frank Act. The proposal creates new
protections for consumers who send remittance transfers from the United
States to a designated recipient in a foreign country. The proposal
generally requires remittance transfer providers to provide the sender
a written pre-payment disclosure containing information about the
specific remittance transfer, such as the exchange rate, applicable
fees and taxes, and the amount to be received by the designated
recipient. The remittance transfer provider generally must also provide
a written receipt for the remittance transfer that includes the above
information, as well as additional information such as the date of
availability and the recipient's contact information. Alternatively,
the proposal permits remittance transfer providers to provide the
sender a single written pre-payment disclosure containing all of the
information required on the receipt.
The proposal also requires remittance transfer providers to furnish
the sender with a brief statement of the sender's error resolution and
cancellation rights, and requires providers to comply with related
recordkeeping, cancellation, and refund policies. The proposed
revisions also implement standards of liability for remittance transfer
providers, including those that act through an agent.
The Board believes that the revisions to Regulation E discussed
above are consistent with the EFTA, as amended by Section 1073 of the
Dodd-Frank Act, and within Congress's broad grant of authority to the
Board to adopt provisions that carry out the purposes of the EFTA.
2. Small entities affected by the proposed rule. The number of
small entities affected by this proposal is unknown. Under regulations
issued by the Small Business Administration (``SBA''), an entity is
considered ``small'' if it has $175 million or less in assets for banks
and other depository institutions, or for other financial businesses,
as one whose average annual receipts do not exceed $7 million.\42\
Based on estimates compiled by the Board, the Federal Deposit Insurance
Corporation, and the Office of Thrift Supervision, there are
approximately 9,458 depository institutions that could be considered
small entities.\43\ In addition, the Financial Crimes Enforcement
Network (FinCEN) previously estimated that there are approximately
19,000 registered money transmitters, an estimated 95% of which have
less than $7 million in gross receipts annually.\44\
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\42\ 13 CFR 121.201; SBA, Table of Small Business Size Standards
(available at: http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf).
\43\ The estimate includes 1,459 institutions regulated by the
Board, 659 national banks, and 4,099 federally-chartered credit
unions, as determined by the Board. The estimate also includes 2,872
institutions regulated by the FDIC and 369 thrifts regulated by the
OTS. See 75 FR 36016, 36020 (Jun. 24, 2010).
\44\ Notice of Proposed Rulemaking, Cross-Border Electronic
Transmittal of Funds, 75 FR 60377, 60392 (Sept. 30, 2010) (estimates
based on FinCEN's February 2010 Money Service Business Registration
List).
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Remittance transfer providers will be required to review and
potentially revise their disclosures and procedures to ensure that
disclosures meet the content, format, timing, and foreign language
requirements of the proposed rule, as described above. Remittance
transfer providers will also be required to review and potentially
update their error resolution and cancellation procedures to ensure
compliance with the proposed rule, also as described above.
Accordingly, remittance transfer providers that are small entities will
incur implementation costs to comply with the rule.
The Board believes that the rule as proposed offers flexibility
that will mitigate the impact of the proposed rule on remittance
transfer providers that are small entities. Although the proposed
disclosure rules do contain certain formatting requirements in order to
ensure that senders notice and comprehend the disclosures, the proposed
rule also gives remittance
[[Page 29937]]
transfer providers some flexibility in drafting their disclosures. For
example, disclosures may be provided on a register receipt or 8.5
inches by 11 inches piece of paper, consistent with current practices
in the industry. The Board also believes that currently, some
remittance transfer providers give the disclosures' required content.
Additionally, EFTA Section 919(a)(5) provides the Board with
exemption authority with respect to several statutory requirements. The
Board is exercising its exemption authority in the proposed rule in
order to reduce providers' compliance burden. For instance, the Board
is exercising its authority under EFTA Section 919(a)(5)(C) to permit
remittance transfer providers to provide the sender a single written
pre-payment disclosure under the conditions described above, instead of
both pre-payment and receipt disclosures. Similarly, consistent with
EFTA Section 919(a)(5)(A), the proposed rule permits remittance
transfer providers to provide pre-payment disclosures orally when the
transaction is conducted entirely by telephone.
Other measures intended to provide flexibility to remittance
transfer providers are discussed above in this SUPPLEMENTARY
INFORMATION.
The proposed rule could have a significant economic impact on small
financial institutions that are remittance transfer providers for
consumer international wire transfers. Specifically, as discussed
above, one consequence of covering remittance transfers under the EFTA
could be legal uncertainty for financial institutions, as providers of
consumer international wire transfers may no longer be able to rely on
UCC Article 4A's rules governing the rights and responsibilities among
the parties to a wire transfer. As a result, some financial
institutions may decide to stop offering international wire transfers
to consumer customers. However, unless these international wire
transfers constitute a high volume of a financial institution's
remittance transfer business, or business in general, such a decision
is unlikely to have a significant economic impact on the institution.
Based on the Board's understanding that consumers are less likely to
send remittance transfers by wire transfer compared to other methods,
the Board does not believe that small financial institutions are likely
to be significantly impacted by the rule.
Nonetheless, the Board solicits comment on whether the proposed
rule will have a significant economic impact on small remittance
transfer providers. The Board also solicits comment on any significant
alternatives that would reduce the regulatory burden associated with
this proposed rule on small entities.
3. Other federal rules. The Board has not identified any likely
duplication, overlap and/or potential conflict between the proposed
rule and any federal rule.
4. Significant alternatives to the proposed revisions. The Board
solicits comment on any significant alternatives that would reduce the
regulatory burden associated with this proposed rule on small entities.
VII. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (PRA) of 1995 (44
U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the rule
under the authority delegated to the Board by the Office of Management
and Budget (OMB). The collection of information that is subject to the
PRA by this proposed rule is found in 12 CFR part 205. In addition, as
permitted by the PRA, the Board also proposes to extend for three years
the current recordkeeping and disclosure requirements in connection
with Regulation E. The Federal Reserve may not conduct or sponsor, and
an organization is not required to respond to, this information
collection unless the information collection displays a currently valid
OMB control number. The OMB control number is 7100-0200.
This information collection is required to provide benefits for
consumers and is mandatory. See 15 U.S.C. 1693 et seq. Since the Board
does not collect any information, no issue of confidentiality arises.
The respondents/recordkeepers are for-profit financial institutions and
entities involved in the remittance transfer business, including small
businesses. Respondents are required to retain records for 24 months,
but this regulation does not specify types of records that must be
retained.
Any entities involved in the remittance transfer business
potentially are affected by this collection of information because
these entities will be required to provide disclosures containing
information about consumers' specific remittance transfers. Disclosures
must be provided prior to and at the time of payment for a remittance
transfer, or alternatively, in a single pre-transaction disclosure
containing all required information. Remittance transfer providers also
make available a written explanation of a consumer's error resolution,
cancellation and refund rights upon request. Disclosures must be
provided in English and in each foreign language principally used to
advertise, solicit or market remittance transfers at an office.
Entities subject to the rule will have to review and revise
disclosures that are currently provided to ensure that they accurately
reflect the disclosure requirements in this proposed rule. Entities
subject to the rule may need to develop new disclosures to meet the
proposed rule's timing requirements.
The total estimated burden increase, as well as the estimates of
the burden increase associated with each major section of the proposed
rule as set forth below, represents averages for all respondents
regulated by the Federal Reserve. The Federal Reserve expects that the
amount of time required to implement each of the proposed changes for a
given institution may vary based on the size and complexity of the
respondent.
The current annual burden to comply with the provisions of
Regulation E is estimated to be 738,600 hours for the 1,133
institutions \45\ supervised by the Federal Reserve that are deemed to
be respondents for the purposes of the PRA.
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\45\ The number of Board-supervised respondents was obtained
from queries of entities that filed December 2010 Call Reports: 828
State member banks, 243 branches & agencies of foreign banks, three
commercial lending companies, and 59 Edge Act or agreement
corporations.
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The Board estimates that 1,133 respondents regulated by the Federal
Reserve would take, on average, 120 hours (three business weeks) to
update their systems to comply with the disclosure requirements
addressed in Sec. 205.31. This one-time revision would increase the
burden by 135,960 hours. On a continuing basis the Board estimates that
1,133 respondents would take, on average, 8 hours (one business day)
monthly to comply with the requirements under Sec. 205.31and would
increase the ongoing burden by 108,768 hours. In an effort to minimize
the compliance cost and burden, particularly for small entities, the
proposed rule contains model disclosures in appendix A (Model Forms A-
10 through A-20) that may be used to satisfy the statutory
requirements.
The Board estimates that on average 825,600 consumers would spend
approximately 5 minutes in order to provide a notice of error as
required under section 205.33(b). This would increase the total annual
burden for this information collection by 68,798 hours.
The Board estimates that 1,133 respondents regulated by the Federal
Reserve would take, on average, 1.5 hours (monthly) to address a
sender's
[[Page 29938]]
notice of error as required by Sec. 205.33(c)(1) and would increase
the ongoing burden by 20,349 hours.
The Board estimates that 1,133 respondents regulated by the Federal
Reserve would take, on average, 40 hours (one business week) to develop
written policies and procedures designed to ensure compliance with
respect to the error resolution requirements applicable to remittance
transfers under Sec. 205.33. This one-time revision would increase the
burden by 45,320 hours. On a continuing basis the Board estimates that
1,133 respondents would take, on average, 8 hours (one business day)
annually to maintain the requirements under Sec. 205.33 and would
increase the ongoing burden by 9,064 hours.
The Board estimates that 1,133 respondents regulated by the Federal
Reserve would take, on average, 40 hours (one business week) to
establish policies and procedures for agent compliance as addressed
under Sec. 205.35, This one-time revision would increase the burden by
45,320 hours. On a continuing basis the Board estimates that 1,133
respondents would take, on average, 8 hours (one business day) annually
to maintain the requirements under Sec. 205.35 and would increase the
ongoing burden by 9,064 hours.
The proposed rule would impose a one-time increase in the estimated
annual burden 226,600 hours. On a continuing basis the proposed rule
would increase in the estimated annual burden by 216,043 hours. Overall
the total annual burden is estimated to increase by 442,643 hours, from
738,600 to 1,181,243 hours.
In a September 2010 rulemaking the Department of Treasury estimated
that as of February 2010, the number of registered U.S. entities
engaged in money transmission was approximately 19,000.\46\ Using the
Federal Reserve's method the proposed rule would impose a one-time
estimated annual burden for such entities of 3,800,000 hours. On a
continuing basis the proposed rule would impose an annual burden for
such entities of 798,000 hours. Overall the proposed total annual
burden for such entities is estimated to be 4,598,000 hours.
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\46\ 75 FR 60377, 60392 (Sept. 30, 2010).
---------------------------------------------------------------------------
The other federal financial agencies \47\ are responsible for
estimating and reporting to OMB the total paperwork burden for the
institutions for which they have administrative enforcement authority.
They may, but are not required to, use the Federal Reserve's burden
estimation methodology. Using the Federal Reserve's method, the current
total estimated annual burden for all persons subject to Regulation E,
including Federal Reserve-supervised institutions would be
approximately 5,166,413 hours. The above estimates represent an average
across all respondents and reflect variations between persons based on
their size, complexity, and practices. All covered persons, including
depository institutions (of which there are approximately 19,000),
potentially are affected by this collection of information, and thus
are respondents for purposes of the PRA. The proposed rule would impose
a one-time increase in the estimated annual burden for such
institutions by 3,800,000 hours. On a continuing basis the proposed
rule would increase in the estimated annual burden for such
institutions by 798,000 hours. The proposed total annual burden for the
respondents regulated by the federal financial agencies is estimated to
be 9,764,413 hours.
---------------------------------------------------------------------------
\47\ Appendix B--Federal Enforcement Agencies--of Regulation E
lists those federal agencies that enforce the regulation for
particular classes of business. The federal financial agencies
include: the Office of the Comptroller of the Currency, Federal
Deposit Insurance Corporation, Office of Thrift Supervision, and
National Credit Union Administration. The federal non-financial
agencies include: Department of Transportation, Securities and
Exchange Commission, and Federal Trade Commission.
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Comments are invited on: (1) Whether the proposed collection of
information is necessary for the proper performance of the Board's
functions; including whether the information has practical utility; (2)
the accuracy of the Board's estimate of the burden of the proposed
information collection, including the cost of compliance; (3) ways to
enhance the quality, utility, and clarity of the information to be
collected; and (4) ways to minimize the burden of information
collection on respondents, including through the use of automated
collection techniques or other forms of information technology.
Comments on the collection of information should be sent to Cynthia
Ayouch, Acting Federal Reserve Clearance Officer, Division of Research
and Statistics, Mail Stop 95-A, Board of Governors of the Federal
Reserve System, Washington, DC 20551, with copies of such comments sent
to the Office of Management and Budget, Paperwork Reduction Project
(7100-0200), Washington, DC 20503.
Text of Proposed Revisions
Certain conventions have been used to highlight the proposed
changes to the text of the regulation and staff commentary. New
language is shown inside [rtrif]bold-faced arrows[ltrif], while
language that would be deleted is set off with [lsqbb]bold-faced
brackets[rsqbb].
List of Subjects in 12 CFR Part 205
Consumer protection, Electronic fund transfers, Federal Reserve
System, Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons set forth in the preamble, the Board proposes to
amend 12 CFR part 205 and the Official Staff Commentary, as follows:
PART 205--ELECTRONIC FUND TRANSFERS (REGULATION E)
1. The authority citation for part 205 continues to read as
follows:
Authority: 15 U.S.C. 1693b.
Subpart A--General
2. Add a new Subpart A heading as set forth above, and designate
Sec. Sec. 205.1 through 205.20 under Subpart A.
3. In Sec. 205.3, revise paragraph (a) to read as follows:
Sec. 205.3 Coverage.
(a) General. This part applies to any electronic fund transfer that
authorizes a financial institution to debit or credit a consumer's
account. Generally, this part applies to financial institutions. For
purposes of Sec. Sec. 205.3(b)(2) and (b)(3), 205.10(b), (d), and (e),
and 205.13, this part applies to any person. [rtrif]The requirements of
Subpart B apply to remittance transfer providers.[ltrif]
* * * * *
4. Add Subpart B to part 205 to read as follows:
Subpart B--Requirements for Remittance Transfers
Sec.
205.30 Remittance transfer definitions.
205.31 Disclosures.
205.32 Estimates.
205.33 Procedures for resolving errors.
205.34 Procedures for cancellation and refund of remittance
transfers.
205.35 Acts of agents.
Subpart B--Requirements for Remittance Transfers
Authority: 12 U.S.C. 5601; Pub. L. 111-203, 124 Stat. 1376
(2010).
[rtrif]Sec. 205.30 Remittance transfer definitions.
For purposes of this subpart, the following definitions apply.
(a) Agent means an agent, authorized delegate, or person affiliated
with a remittance transfer provider, as defined under state or other
applicable law, when such agent, authorized delegate,
[[Page 29939]]
or affiliate acts for that remittance transfer provider.
(b) Business day means any day on which a remittance transfer
provider accepts funds for sending remittance transfers.
(c) Designated recipient means any person specified by the sender
as the authorized recipient of a remittance transfer to be received at
a location in a foreign country.
(d) Remittance transfer--(1) General definition. A remittance
transfer means the electronic transfer of funds requested by a sender
to a designated recipient that is sent by a remittance transfer
provider. The term applies regardless of whether the sender holds an
account with the remittance transfer provider, and regardless of
whether the transaction is also an electronic fund transfer, as defined
in Sec. 205.3(b).
(2) Exception for small value transactions. Remittance transfers do
not include transfer amounts of $15 or less.
(e) Remittance transfer provider or provider means any person that
provides remittance transfers for a consumer in the normal course of
its business, regardless of whether the consumer holds an account with
such person.
(f) Sender means a consumer in a state who requests a remittance
transfer provider to send a remittance transfer to a designated
recipient.
Sec. 205.31 Disclosures.
(a) General form of disclosures-- (1) Clear and conspicuous.
Disclosures required by this subpart must be clear and conspicuous.
Disclosures required by this subpart may contain commonly accepted or
readily understandable abbreviations or symbols.
(2) Written and electronic disclosures. Disclosures required by
this subpart generally must be provided to the sender in writing.
Disclosures required by paragraph (b)(1) of this section may be
provided electronically, if the sender electronically requests the
remittance transfer provider to send the remittance transfer. Written
and electronic disclosures required by this subpart must be made in a
retainable form.
(3) Oral disclosures for telephone transactions. The information
required by paragraph (b)(1) of this section may be disclosed orally
if:
(i) The transaction is conducted entirely by telephone; and
(ii) The remittance transfer provider complies with the
requirements of paragraph (g)(2) of this section.
(4) Oral disclosures for certain error resolution notices. The
information required by Sec. 205.33(c)(1) may be disclosed orally if:
(i) The remittance transfer provider determines that an error
occurred as described by the sender; and
(ii) The remittance transfer provider complies with the
requirements of paragraph (g)(2) of this section.
(b) Disclosure requirements--(1) Pre-payment disclosure. A
remittance transfer provider must disclose to a sender, as applicable:
(i) The amount that will be transferred to the designated
recipient, in the currency in which the funds will be transferred,
using the term ``Transfer Amount'' or a substantially similar term;
(ii) Any fees and taxes imposed on the remittance transfer by the
provider, in the currency in which the funds will be transferred, using
the term ``Transfer Fees,'' ``Transfer Taxes,'' or ``Transfer Fees and
Taxes,'' or a substantially similar term;
(iii) The total amount of the transaction, which is the sum of
paragraphs (b)(1)(i) and (b)(1)(ii) of this section, in the currency in
which the funds will be transferred, using the term ``Total'' or a
substantially similar term;
(iv) The exchange rate used by the provider for the remittance
transfer, rounded to the nearest 1/100th of a decimal point, using the
term ``Exchange Rate'' or a substantially similar term;
(v) The amount in paragraph (b)(1)(i) of this section in the
currency in which the funds will be received by the designated
recipient, but only if fees or taxes are imposed under paragraph
(b)(1)(vi) of this section, using the term ``Transfer Amount'' or a
substantially similar term;
(vi) Any fees and taxes imposed on the remittance transfer by a
person other than the provider, in the currency in which the funds will
be received by the designated recipient, using the term ``Other
Transfer Fees,'' ``Other Transfer Taxes,'' or ``Other Transfer Fees and
Taxes,'' or a substantially similar term.
(vii) The amount that will be received by the designated recipient,
in the currency in which the funds will be received, using the term
``Total to Recipient'' or a substantially similar term.
(2) Receipt. A remittance transfer provider must disclose to a
sender, as applicable:
(i) The disclosures described in paragraphs (b)(1)(i) through
(b)(1)(vii) of this section;
(ii) The date of availability of funds to the designated recipient,
using the term ``Date Available'' or a substantially similar term. A
provider may provide a statement that funds may be available to the
designated recipient earlier than the date disclosed, using the term
``may be available sooner'' or a substantially similar term.
(iii) The name and, if provided by the sender, the telephone number
and/or address of the designated recipient, using the term
``Recipient'' or a substantially similar term;
(iv) A statement about the rights of the sender regarding the
resolution of errors and cancellation, using language set forth in
Model Form A-37 of Appendix A to this part or substantially similar
language;
(v) The name, telephone number, and Web site of the remittance
transfer provider; and
(vi) A statement that the sender can contact the state agency that
regulates the remittance transfer provider and the Consumer Financial
Protection Bureau for questions or complaints about the remittance
transfer provider, using language set forth in Model Form A-37 of
Appendix A to this part or substantially similar language, and the
telephone number and Web site of the state agency that regulates the
remittance transfer provider and the telephone number and Web site of
the Consumer Financial Protection Bureau, including the toll-free
telephone number established under Section 1013 of the Consumer
Financial Protection Act of 2010.
(3) Combined disclosure. As an alternative to providing the
disclosures described in paragraphs (b)(1) and (b)(2) of this section,
a remittance transfer provider may provide the disclosures described in
paragraph (b)(2) of this section, as applicable, in a single
disclosure.
(4) Long form error resolution and cancellation notice. Upon the
sender's request, a remittance transfer provider must provide to the
sender a notice providing a description of the sender's error
resolution and cancellation rights under Sec. Sec. 205.33 and 205.34
using Model Form A-36 of Appendix A to this part or a substantially
similar notice.
(c) Specific format requirements-- (1) Grouping. The information
required by paragraphs (b)(1)(i), (ii), and (iii) of this section must
be grouped together in written and electronic disclosures. The
information required by paragraphs (b)(1)(v), (vi), and (vii) of this
section must be grouped together in written and electronic disclosures.
(2) Proximity. The information required by paragraph (b)(1)(iv) of
this section must be disclosed in close proximity to the other
information required by paragraph (b)(1) of this section in written and
electronic disclosures. The information required by paragraph
(b)(2)(iv) of this section
[[Page 29940]]
must be disclosed in close proximity to the other information required
by paragraph (b)(2) of this section in written and electronic
disclosures.
(3) Prominence and size. Written disclosures required by this
subpart must be provided on the front of the page on which the
disclosure is printed. Written and electronic disclosures required by
this subpart must be in a minimum eight-point font. Written and
electronic disclosures required by paragraph (b) of this section must
be in equal prominence to each other.
(4) Segregation. Written and electronic disclosures required by
this subpart must be segregated from everything else and must contain
only information that is directly related to the disclosures required
under this subpart.
(d) Estimates. Estimated disclosures may be provided to the extent
permitted by Sec. 205.32. Estimated disclosures must be described
using the term ``Estimated'' or a substantially similar term and in
close proximity to the estimated term or terms.
(e) Timing. (1) Disclosures required by paragraph (b)(1) or (b)(3)
of this section must be provided to the sender when the sender requests
the remittance transfer, but prior to payment for the remittance
transfer.
(2) A receipt required by paragraph (b)(2) of this section must be
provided to the sender when payment is made for the remittance
transfer. If a transaction is conducted entirely by telephone, a
written receipt may be mailed or delivered to the sender no later than
one business day after the date on which payment is made for the
remittance transfer. If a transaction is conducted entirely by
telephone and involves the transfer of funds from the sender's account
held by the provider, the written receipt may be provided on or with
the next regularly scheduled periodic statement or within 30 days after
payment is made for the remittance transfer if a periodic statement is
not required and must comply with paragraph (g)(3) of this section.
(f) Accurate when payment is made. Disclosures required by this
section must be accurate when a sender pays for the remittance
transfer, except to the extent permitted by Sec. 205.32
(g) Foreign language disclosures-- (1) General. Except as provided
in paragraphs (g)(2) and (g)(3) of this section, disclosures required
by this subpart must be made in English and either:
(i) In each of the foreign languages principally used by the
remittance transfer provider to advertise, solicit, or market
remittance transfer services, either orally, in writing, or
electronically, at that office; or
(ii) If applicable, in the foreign language primarily used by the
sender with the remittance transfer provider to conduct the transaction
(or for written or electronic disclosures made pursuant to Sec.
205.33, in the foreign language primarily used by the sender with the
remittance transfer provider to assert the error), provided that such
foreign language is principally used by the remittance transfer
provider to advertise, solicit, or market remittance transfer services,
either orally, in writing, or electronically, at that office.
(2) Oral disclosures. Disclosures permitted to be provided orally
under paragraph (a)(3) of this section for transactions conducted
entirely by telephone shall be made in the language primarily used by
the sender with the remittance transfer provider to conduct the
transaction. Disclosures permitted to be provided orally under
paragraph (a)(4) of this section for error resolution purposes shall be
made in the language primarily used by the sender with the remittance
transfer provider to assert the error.
(3) Written receipts for telephone transactions. Receipts required
to be provided to the sender after payment under paragraph (e)(2) of
this section for transactions conducted entirely by telephone shall be
made in English and, if applicable, in the foreign language primarily
used by the sender with the remittance transfer provider to conduct the
transaction.
Sec. 205.32 Estimates.
(a) Temporary exception for insured institutions--(1) General.
Estimates may be provided in accordance with paragraph (c) of this
section for the amounts required to be disclosed under Sec. Sec.
205.31(b)(1)(iv) through (vii), if:
(i) A remittance transfer provider cannot determine the exact
amounts for reasons beyond its control;
(ii) A remittance transfer provider is an insured institution; and
(iii) The remittance transfer is sent from the sender's account
with the institution.
(2) Sunset date. Paragraph (a)(1) of this section expires on July
20, 2015.
(3) Insured institution. For purposes of this section, the term
``insured institution'' includes insured depository institutions as
defined in Section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813) and insured credit unions as defined in Section 101 of the
Federal Credit Union Act (12 U.S.C. 1752).
(b) Permanent exception for transfers to certain countries.
Estimates may be provided in accordance with paragraph (c) of this
section for the amounts required to be disclosed under Sec. Sec.
205.31(b)(1)(iv) through (vii), if a remittance transfer provider
cannot determine the exact amounts because
(1) The laws of the recipient country do not permit, or
(2) The method by which transactions are made in the recipient
country does not permit, such determination.
(c) Bases for estimates. Estimates provided pursuant to the
exceptions in paragraph (a) or (b) of this section must be based on the
below-listed approach or approaches applicable to the required
disclosure. If a remittance transfer provider bases an estimate on an
approach that is not listed in this paragraph (c), the provider
complies with this paragraph (c) so long as the designated recipient
receives the same, or a greater amount, of currency that it would have
received had the estimate been based on a listed approach.
(1) Exchange rate. In disclosing the exchange rate as required
under Sec. 205.31(b)(1)(iv), an estimate must be based on one of the
following:
(i) For remittance transfers sent via international ACH that
qualify for the exception in paragraph (b)(2) of this section, the most
recent exchange rate set by the recipient country's central bank and
reported by a Federal Reserve Bank;
(ii) The most recent publicly available wholesale exchange rate; or
(iii) The most recent exchange rate offered by the person making
funds available directly to the designated recipient.
(2) Transfer amount in the currency made available to the
designated recipient. In disclosing the transfer amount in the currency
made available to the designated recipient, as required under Sec.
205.31(b)(1)(v), an estimate must be based on the estimated exchange
rate provided in accordance with paragraph (c)(1) of this section.
(3) Other fees imposed by intermediaries. In disclosing fees
imposed by institutions that act as intermediaries in connection with
an international wire transfer as required under Sec.
205.31(b)(1)(vi), an estimate must be based on one of the following:
(i) The remittance transfer provider's most recent remittance
transfer to the designated recipient's institution, or
(ii) The representations of the intermediary institutions along a
representative route identified by the remittance transfer provider
that the requested transfer could travel.
(4) Other taxes imposed in the recipient country. In disclosing
taxes imposed in the recipient country as required under Sec.
205.31(b)(1)(vi) that are
[[Page 29941]]
a percentage of the amount transferred to the designated recipient, an
estimate must be based on the estimated exchange rate provided in
accordance with paragraph (c)(1) of this section and the estimated fees
imposed by institutions that act as intermediaries in connection with
an international wire transfer provided in accordance with paragraph
(c)(3) of this section.
(5) Amount of currency that will be received by the designated
recipient. In disclosing the amount of currency that will be received
by the designated recipient as required under Sec. 205.31(b)(1)(vii),
an estimate must be based on the estimates provided in accordance with
paragraphs (c)(1), (3), and (4) of this section, as applicable.
Sec. 205.33 Procedures for resolving errors.
(a) Definition of error--(1) Types of transfers or inquiries
covered. For purposes of this section, the term error means:
(i) An incorrect amount paid by a sender in connection with a
remittance transfer;
(ii) A computational or bookkeeping error made by the remittance
transfer provider relating to a remittance transfer;
(iii) The failure to make available to a designated recipient the
amount of currency stated in the disclosure provided to the sender
under Sec. 205.31(b)(2) or (b)(3), unless the disclosure stated an
estimate of the amount to be received in accordance with Sec. 205.32;
(iv) The failure to make funds in connection with a remittance
transfer available to a designated recipient by the date of
availability stated in the disclosure provided to the sender under
Sec. 205.31(b)(2) or (b)(3), unless the failure to make the funds
available resulted from:
(A) Circumstances outside the remittance transfer provider's
control; or
(B) The sender providing incorrect information in connection with a
remittance transfer to the remittance transfer provider, so long as the
provider gives the sender the opportunity to correct the information
and send the transfer at no additional cost; or
(v) The sender's request for documentation required by Sec. 205.31
or for additional information or clarification concerning a remittance
transfer, including a request a sender makes to determine whether an
error exists under paragraph (a)(1)(i) through (iv) of this section.
(2) Types of transfers or inquiries not covered. The term error
does not include:
(i) An inquiry involving a transfer of $15 or less;
(ii) An inquiry about the status of a remittance transfer, except
where the funds from the transfer were not made available to a
designated recipient by the stated date of availability as described in
paragraph (a)(1)(iv) of this section; or
(iii) A request for information for tax or other recordkeeping
purposes.
(b) Notice of error from sender--
(1) Timing; contents. A remittance transfer provider shall comply
with the requirements of this section with respect to any oral or
written notice of error from a sender that:
(i) Is received by the remittance transfer provider no later than
180 days after the stated date of availability of the remittance
transfer;
(ii) Enables the provider to identify:
(A) The sender's name and telephone number or address;
(B) The recipient's name, and if known, the telephone number or
address of the recipient; and
(C) The remittance transfer to which the notice of error applies;
and
(iii) Indicates why the sender believes an error exists and
includes to the extent possible the type, date, and amount of the
error, except for requests for documentation, additional information,
or clarification described in paragraph (a)(1)(v) of this section.
(2) Request for documentation or clarification. When a notice of
error is based on documentation, additional information, or
clarification that the sender requested under paragraph (a)(1)(v) of
this section, the sender's notice of error is timely if received by the
remittance transfer provider no later than 60 days after the provider
sent the documentation, information, or clarification requested.
(c) Time limits and extent of investigation--
(1) Time limits for investigation and report to consumer of error.
A remittance transfer provider shall investigate promptly and determine
whether an error occurred within 90 days of receiving a notice of
error. The remittance transfer provider shall report the results to the
sender, including notice of any remedies available for correcting any
error that the provider determines has occurred, within three business
days after completing its investigation.
(2) Remedies. If the remittance transfer provider determines an
error occurred, the provider shall, within one business day of, or as
soon as reasonably practicable after, receiving the sender's
instructions regarding the appropriate remedy, correct the error as
designated by the sender by:
(i) Refunding to the sender the amount of funds tendered by the
sender in connection with a remittance transfer which was not properly
transmitted, or the amount appropriate to resolve the error; or
(ii) Making available to the designated recipient, without
additional cost to the sender or to the designated recipient, the
amount appropriate to resolve the error; and
(iii) In the case of an error asserted under paragraph (a)(1)(iv)
of this section, refunding to the sender any fees imposed for the
remittance transfer.
(d) Procedures if remittance transfer provider determines no error
or different error occurred. In addition to following the procedures
specified in paragraph (c) of this section, the remittance transfer
provider shall follow the procedures set forth in this paragraph (d) if
it determines that no error occurred or that an error occurred in a
manner or amount different from that described by the sender.
(1) Explanation of results of investigation. The remittance
transfer provider's report of the results of the investigation shall
include a written explanation of the provider's findings and shall note
the sender's right to request the documents on which the provider
relied in making its determination. The explanation shall also respond
to the specific complaint of the sender.
(2) Copies of documentation. Upon the sender's request, the
remittance transfer provider shall promptly provide copies of the
documents on which the provider relied in making its error
determination.
(e) Reassertion of error. A remittance transfer provider that has
fully complied with the error resolution requirements of this section
has no further responsibilities under this section should the sender
later reassert the same error, except in the case of an error asserted
by the sender following receipt of information provided under paragraph
(a)(1)(v) of this section.
(f) Relation to other laws--(1) Relation to Regulation E Sec.
205.11 for incorrect EFTs from a sender's account. If an alleged error
involves an incorrect electronic fund transfer from a sender's account
in connection with a remittance transfer, and the sender provides a
notice of error to the account-holding institution, the account-holding
institution shall comply with the requirements of Sec. 205.11
governing error resolution rather than the requirements of this
section, provided that the account-holding institution is not also
[[Page 29942]]
the remittance transfer provider. If the remittance transfer provider
is also the financial institution that holds the consumer's account,
then the error-resolution provisions of this section apply when the
sender provides such notice of error.
(2) Relation to Truth in Lending Act and Regulation Z. If an
alleged error involves an incorrect extension of credit in connection
with a remittance transfer, and the sender provides a notice of error
to the creditor holding the credit card account, the provisions of
Regulation Z, 12 CFR 226.13, governing error resolution apply to the
creditor, rather than the requirements of this section, even if the
creditor is the remittance transfer provider. If the sender instead
provides a notice of error to the remittance transfer provider, then
the error-resolution provisions of this section apply to the remittance
transfer provider.
(3) Unauthorized remittance transfers. If an alleged error involves
an unauthorized electronic fund transfer for payment in connection with
a remittance transfer, Sec. Sec. 205.6 and 205.11 apply with respect
to the account-holding institution. If an alleged error involves an
unauthorized use of a credit card for payment in connection with a
remittance transfer, the provisions of Regulation Z, 12 CFR 226.12(b)
and 226.13, apply with respect to the creditor.
(g) Error resolution standards and recordkeeping requirements--(1)
Compliance program. A remittance transfer provider shall develop and
maintain written policies and procedures that are designed to ensure
compliance with respect to the error resolution requirements applicable
to remittance transfers under this section. The provider must also take
steps designed to ensure that an agent of the provider that performs
any error resolution obligations on behalf of the provider, conducts
such activity in accordance with the remittance transfer provider's
policies and procedures.
(2) Retention of error-related documentation. The remittance
transfer provider's policies and procedures required under paragraph
(g)(1) of this section shall include policies and procedures regarding
the retention of documentation related to error investigations. Such
policies and procedures must ensure, at a minimum, the retention of any
notices of error submitted by a sender, documentation provided by the
sender to the provider with respect to the alleged error, and the
findings of the remittance transfer provider regarding the
investigation of the alleged error.
Sec. 205.34 Procedures for cancellation and refund of remittance
transfers.
(a) Sender right of cancellation and refund. A remittance transfer
provider shall comply with the requirements of this section with
respect to any oral or written request to cancel a remittance transfer
from the sender that is received by the provider no later than one
business day from when the sender makes payment in connection with the
remittance transfer if:
(1) The request to cancel enables the provider to identify the
sender's name and address or telephone number and the particular
transfer to be cancelled; and
(2) The transferred funds have not been picked up by the designated
recipient or deposited into an account of the designated recipient.
(b) Time limits and refund requirements. A remittance transfer
provider shall refund, at no additional cost to the sender, the total
amount of funds tendered by the sender in connection with a remittance
transfer, including any fees imposed in connection with the remittance
transfer, within three business days of receiving a sender's request to
cancel the remittance transfer.
Sec. 205.35 Acts of agents.
Alternative A
A remittance transfer provider is liable for any violation of this
subpart by an agent when such agent acts for the provider.
Alternative B
A remittance transfer provider is liable for any violation of this
subpart by an agent when such agent acts for the provider, unless:
(a) The remittance transfer provider establishes and maintains
written policies and procedures designed to assure compliance with this
subpart by its agents, including appropriate oversight practices; and
(b) The remittance transfer provider corrects the violation to the
extent appropriate, including complying with the error resolution
procedures set forth in Sec. 205.33 and providing the sender the
remedies set forth in Sec. 205.33(c)(2). [ltrif]
5. Amend Appendix A to Part 205 as follows:
a. Add Titles A-6 through A-8, and A-30 through A-41, and reserve
A-10 through A-29 to the Table of Contents
b. Add Model Forms A-30 through A-41
The additions and revisions read as follows:
Appendix A to Part 205--Model Disclosure Clauses and Forms
Table of Contents
* * * * *
[rtrif] A-6--Model Clauses for Authorizing One-Time Electronic Fund
Transfers Using Information From a Check (Sec. 205.3(b)(2))
A-7--Model Clauses for Financial Institutions Offering Payroll Card
Accounts (Sec. 205.18(c))
A-8--MODEL CLAUSE FOR ELECTRONIC COLLECTION OF RETURNED ITEM FEES
(Sec. 205.3(b)(3))
* * * * *
A-10 through A-29--(Reserved)
A-30--Model form for pre-payment disclosures for remittance transfers
exchanged into local currency (Sec. 205.31(b)(1))
A-31--Model form for receipts for remittance transfers exchanged into
local currency (Sec. 205.31(b)(2))
A-32--Model form for combined disclosures for remittance transfers
exchanged into local currency (Sec. 205.31(b)(3))
A-33--Model form for pre-payment disclosures for dollar-to-dollar
remittance transfers (Sec. 205.31(b)(1))
A-34--Model form for receipts for dollar-to-dollar remittance transfers
(Sec. 205.31(b)(2))
A-35--Model form for combined disclosures for dollar-to-dollar
remittance transfers (Sec. 205.31(b)(3))
A-36--Model form for error resolution and cancellation disclosures
(long) (Sec. 205.31(b)(4))
A-37--Model form for error resolution and cancellation disclosures
(short) (Sec. 205.31(b)(2)(vi))
A-38--Model form for pre-payment disclosures--Spanish (Sec.
205.31(b)(1))
A-39--Model form for receipts--Spanish (Sec. 205.31(b)(2))
A-40--Model form for combined disclosures--Spanish (Sec. 205.31(b)(3))
A-41--Model form for error resolution and cancellation disclosures
(long)--Spanish (Sec. 205.31(b)(4)) [ltrif]
* * * * *
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BILLING CODE 6210-01-C
6. In Supplement I to part 205:
a. Add new Commentary for Sections 205.30, 205.31, 205.32, 205.33,
205.34, and 205.35.
b. Under subheading Appendix A, paragraph (2) Use of forms is
revised and paragraph (4) is added.
The revision and additions read as follows:
Supplement I to Part 205--Official Staff Interpretations
* * * * *
[rtrif] Section 205.30--Remittance Definitions
30(b) Business Day
1. General. With respect to Subpart B, a business day includes the
entire 24-hour period ending at midnight, and a notice required by any
section of Subpart B is effective even if given outside of normal
business hours. No section of Subpart B requires that a remittance
transfer provider make telephone lines available on a 24-hour basis.
[[Page 29954]]
30(c) Designated Recipient
1. Person. A designated recipient can be either a natural person or
a business. See Sec. 205.2(j) (definition of person).
2. Located in a foreign country. A remittance transfer is received
at a location in a foreign country if funds are to be received at a
location physically outside of any state, as defined in Sec. 205.2(l).
30(d) Remittance Transfer
1. Electronic transfer of funds. The definition of remittance
transfer requires an electronic transfer of funds. The term electronic
has the meaning given in Section 106(2) of the Electronic Signatures in
Global and National Commerce Act. There may be an electronic transfer
of funds if a provider makes an electronic book entry between different
settlement accounts to effectuate the transfer. However, where a sender
mails funds directly to a recipient, or provides funds to a courier for
delivery to a foreign country, there has not been an electronic
transfer of funds. Therefore, non-electronic remittance methods are not
remittance transfers.
2. Request by a sender. The definition of remittance transfer
requires a specific sender request that a remittance transfer provider
send a remittance transfer. A deposit by a consumer into a checking or
savings account does not itself constitute such a request, even if a
person in a foreign country is an authorized user on that account,
where the consumer retains the ability to withdraw funds in the
account.
3. To a designated recipient. The definition of remittance transfer
requires that the transfer be sent to a designated recipient. See
comment 30(c)-1. There is no designated recipient unless the sender
specifically identifies the recipient of a transfer. A transfer is sent
to a designated recipient if, for example, the sender instructs a
remittance transfer provider to send a prepaid card to a specified
recipient in a foreign country, and the sender does not retain the
ability to draw down funds on the prepaid card. In contrast, there is
no designated recipient where the sender retains the ability to
withdraw funds, such as when a person in a foreign country is made an
authorized user on the sender's checking account, because the
remittance transfer provider cannot identify the ultimate recipient of
the funds.
4. Sent by a remittance transfer provider. i. The definition of
remittance transfer requires that a transfer must be ``sent by a
remittance transfer provider.'' This means that there must be an
intermediary actively involved in sending the transfer of funds.
Examples include:
A. A person (other than the sender) sending an instruction to a
receiving agent in a foreign country to make funds available to a
recipient;
B. Executing a payment order pursuant to a consumer's instructions;
C. Executing a consumer's online bill payment request; or
D. Otherwise engaging in the business of accepting or debiting
funds for transmission to a recipient and transmitting those funds.
ii. However, a payment card network or other third party payment
service that is functionally similar to a payment card network does not
send a remittance transfer when a consumer designates a debit or credit
card as the payment method to purchase goods or services from a foreign
merchant. In such a case, the payment card network or third party
payment service is not directly engaged with the sender to send a
transfer of funds to a person in a foreign country; rather, the network
or third party payment service is merely providing contemporaneous
third-party payment processing and settlement services on behalf of the
merchant or the remittance transfer provider, rather than on behalf of
the sender. Similarly, where a consumer provides a checking or other
account number directly to a merchant as payment for goods or services,
the merchant is not acting as a remittance transfer provider when it
submits the payment information for processing.
5. Examples of remittance transfers.
i. Examples of remittance transfers include:
A. Transfers where the sender provides cash or another method of
payment to a money transmitter or financial institution that directs
funds to be sent to a specified payout location or account in a foreign
country.
B. Consumer wire transfers, where a financial institution executes
a payment order upon a sender's request to wire money from the sender's
account to a designated recipient.
C. A sender's addition of funds to a prepaid card, which the
prepaid card issuer sends or has previously sent to a designated
recipient, if the sender does not retain the ability to withdraw such
funds.
D. International ACH transactions sent by the sender's financial
institution at the sender's request.
E. Online bill payments to foreign merchants made by the sender's
financial institution at the sender's request.
ii. The term remittance transfer does not include:
A. A consumer's purchase of goods or services from a merchant in a
foreign country with a credit or debit card.
B. A consumer's deposit of funds to his or her checking or savings
account that can be withdrawn by an authorized user located in a
foreign country, but where the consumer retains the ability to withdraw
funds in the account.
C. Online bill payments made through the Web site of a merchant
located in a foreign country.
30(e) Remittance Transfer Provider
1. Agents. An agent is not deemed to be a remittance transfer
provider by merely providing remittance transfer services on behalf of
the remittance transfer provider.
Section 205.31--Disclosures
31(a) General Form of Disclosures
Paragraph 31(a)(1)--Clear and Conspicuous
1. Clear and conspicuous standard. Disclosures are clear and
conspicuous for purposes of Subpart B if they are readily
understandable and, in the case of written and electronic disclosures,
the location and type size are readily noticeable to senders. To the
extent permitted by Sec. Sec. 205.31(a)(3) and (4), oral disclosures
are clear and conspicuous when they are given at a volume and speed
sufficient for a sender to hear and comprehend them.
2. Abbreviations and symbols. Disclosures may contain commonly
accepted or readily understandable abbreviations or symbols, such as
``USD'' to indicate currency in U.S. dollars or ``MXN'' to indicate
currency in Mexican pesos.
Paragraph 31(a)(2)--Written and Electronic Disclosures
1. E-Sign Act requirements. If a sender electronically requests the
remittance transfer provider to send a remittance transfer, pre-payment
disclosures required by Sec. 205.31(b)(1) may be provided to the
sender in electronic form without regard to the consumer consent and
other applicable provisions of the Electronic Signatures in Global and
National Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.). If a
sender electronically requests the provider to send a remittance
transfer, receipts required by Sec. 205.31(b)(2) may be provided to
the consumer in electronic form, subject to compliance with the
consumer consent and other applicable provisions of the E-Sign Act. See
Sec. 205.4(a)(1).
2. Paper size. Written disclosures may be provided on any size
paper, as long as the disclosures are clear and
[[Page 29955]]
conspicuous. For example, disclosures may be provided on a register
receipt or on an 8.5 inch by 11 inch sheet of paper.
3. Retainable electronic disclosures. A remittance transfer
provider may satisfy the requirement to provide electronic disclosures
in a retainable form if it provides an on-line disclosure in a format
that is capable of being printed. Electronic disclosures may not be
provided through a hyperlink or in another manner by which the sender
can bypass the disclosure. A provider is not required to confirm that
the sender has read the electronic disclosures.
Paragraph 31(a)(3)--Oral Disclosures for Telephone Transactions
1. Transactions conducted partially by telephone. For transactions
conducted partially by telephone, disclosures may not be provided
orally. For example, a sender may begin a remittance transfer at a
remittance transfer provider's dedicated telephone in a retail store,
and then provide payment in person to a store clerk to complete the
transaction. In such cases, all disclosures must be provided in
writing. A provider complies with this requirement, for example, by
providing the written pre-payment disclosure in person prior to the
sender's payment for the transaction, and the written receipt when the
sender pays for the transaction.
31(b) Disclosure Requirements
1. Disclosures provided as applicable. Disclosures required by
Sec. 205.31(b) need only be provided to the extent applicable. A
remittance transfer provider may choose to omit an item of information
required by Sec. 205.31(b) if it is inapplicable to a particular
transaction. Alternatively, a provider may disclose a term and state
that an amount or item is ``not applicable,'' ``N/A,'' or ``None.'' For
example, if fees or taxes are not imposed in connection with a
particular transaction, the provider need not provide the disclosures
required by Sec. 205.31(b)(1)(ii) or (b)(1)(vi). Similarly, a Web site
need not be disclosed under Sec. 205.31(b)(2)(v) if the provider does
not maintain a Web site. A provider need not provide the exchange rate
disclosure required by Sec. 205.31(b)(1)(iv) if a recipient receives
currency in U.S. dollars or currency is delivered into an account in
U.S. dollars, rather than in another currency.
2. Substantially similar terms, language, and notices. Some
disclosures required by Sec. 205.31(b) must be described using the
terms set forth in Sec. 205.31(b) or substantially similar terms.
Terms may be more specific than those provided. For example, a
remittance transfer provider sending funds to Colombia may describe a
tax under Sec. 205.31(b)(1)(vi) as a ``Colombian Tax'' in lieu of
describing it as ``Other Taxes.'' Foreign language disclosures required
under Sec. 205.31(g) must contain accurate translations of the terms,
language, and notices required by Sec. 205.31(b).
Paragraph 31(b)(1)--Pre-Payment Disclosures
1. Fees and taxes. i. Taxes imposed by the remittance transfer
provider include taxes imposed on the remittance transfer by a state or
other governmental body. A provider need only disclose fees or taxes
required by Sec. 205.31(b)(1)(ii) and (vi), as applicable. For
example, if no transfer taxes are imposed on a remittance transfer, a
provider would only disclose applicable transfer fees. See comment
31(b)-1. If both fees and taxes are imposed, the fees and taxes may be
disclosed as one disclosure or as separate, itemized disclosures.
ii. The fees and taxes required to be disclosed by Sec.
205.31(b)(1)(ii) include all fees and taxes imposed on the remittance
transfer by the provider. For example, a provider must disclose a
service fee and any state taxes imposed on the remittance transfer. In
contrast, the fees and taxes required to be disclosed by Sec.
205.31(b)(1)(vi) include fees and taxes imposed on the remittance
transfer by a person other than the provider. For example, a provider
must disclose fees imposed by the receiving institution or agent at
pick-up, fees imposed by intermediary institutions in connection with
an international wire transfer, and taxes imposed by a foreign
government. The terms used to describe the fees and taxes in Sec.
205.31(b)(1)(ii) and (b)(1)(vi) must differentiate between such fees
and taxes. For example, the terms used to describe fees disclosed under
Sec. 205.31(b)(1)(ii) and (b)(1)(vi) may not both be described as
``Fees.''
2. Transfer amount. Sections 205.31(b)(1)(i) and (b)(1)(v) require
two transfer amount disclosures. First, under Sec. 205.31(b)(1)(i), a
provider must disclose the transfer amount in the currency in which the
funds will be transferred to show the calculation of the total amount
of the transaction. Typically, funds will be transferred in U.S.
dollars, so the transfer amount would be expressed in U.S. dollars.
However, if funds will be transferred, for example, from a Euro-
denominated account, the transfer amount would be expressed in Euros.
Second, under Sec. 205.31(b)(1)(v), a provider must disclose the
transfer amount in the currency in which the funds will be made
available to the designated recipient. For example, if the funds will
be picked up by the designated recipient in Japanese yen, the transfer
amount would be expressed in Japanese yen. However, this second
transfer amount need not be disclosed if fees and taxes are not imposed
on the remittance transfer under Sec. 205.31(b)(1)(vi). The terms used
to describe each transfer amount should be the same.
Paragraph 31(b)(1)(iv)--Exchange Rate
1. Applicable exchange rate for estimates. If the designated
recipient will receive funds in a currency other than the currency in
which it will be transferred, a remittance transfer provider must
disclose an exchange rate. An exchange rate that is estimated must be
disclosed pursuant to the requirements of Sec. 205.32. A remittance
transfer provider may not disclose, for example, that an estimated
exchange rate is ``unknown,'' ``floating,'' or ``to be determined.''
2. Rounding. The exchange rate used by the provider for the
remittance transfer is required to be rounded to the nearest 1/100th of
a decimal point. However, an exchange rate need not be expressed to the
nearest 1/100th of a decimal point if the amount need not be rounded.
For example, if one U.S. dollar exchanges for 11.9483 Mexican pesos, a
provider must disclose that the U.S. dollar exchanges for 11.95 Mexican
pesos. However, if one U.S. dollar exchanges for 11.9 Mexican pesos,
the provider may disclose that ``US$1 = 11.9 MXN'' in lieu of ``US$1 =
11.90 MXN.''
Paragraph 31(b)(1)(vi)--Fees and Taxes Imposed by a Person Other than
the Provider
1. Fees and taxes disclosed in the currency in which the funds will
be received. Section 205.31(b)(1)(vi) requires the disclosure of fees
and taxes in the currency in which the funds will be received by the
designated recipient. A fee or tax required by Sec. 205.31(b)(1)(vi)
may be imposed in one currency, but the funds may be received by the
designated recipient in another currency. In such cases, the remittance
transfer provider should calculate the fee or tax to be disclosed using
the exchange rate required by Sec. 205.31(b)(1)(iv). For example, an
intermediary institution in an international wire transfer may impose a
fee in U.S. dollars, but funds are ultimately deposited in the
recipient's account in Euros. Here, the provider would disclose the fee
to the sender expressed in Euros, calculated using the exchange rate
used by the provider for the remittance transfer.
[[Page 29956]]
Paragraph 31(b)(1)(vii)--Amount Received
1. Amount received. The remittance transfer provider is required to
disclose the amount that will be received by the designated recipient
in the currency in which the funds will be received. The amount
received must reflect all charges that affect the amount received,
including the exchange rate and all fees and taxes imposed by the
remittance transfer provider, the receiving institution, and any other
party in the transmittal route of a remittance transfer. The disclosed
amount received must be reduced by the amount of any fee or tax that is
imposed by a person other than the provider, even if that amount is
imposed or itemized separately from the transaction amount.
Paragraph 31(b)(2)--Receipt
1. Date of availability. The date of availability of funds to the
designated recipient is the date in the foreign country on which the
funds will be available to the designated recipient. A remittance
transfer provider does not comply with the requirements of Sec.
205.31(b)(2)(ii) if it provides a range of dates that the remittance
transfer may be available or an estimate of the date on which funds
will be available. If a provider does not know the exact date on which
funds will be available, the provider may disclose the latest date on
which the funds will be available. For example, if funds may be
available on January 3, but are not certain to be available until
January 10, then January 10 should be disclosed as the date of
availability. However, a remittance transfer provider may also disclose
that funds ``may be available sooner'' or use a substantially similar
term to inform senders that funds may be available to the designated
recipient on a date earlier than the date disclosed. For example, a
provider may disclose ``January 10 (may be available sooner).''
31(c) Specific Format Requirements
Paragraph 31(c)(1)--Grouping
1. Grouping. Information is grouped together for purposes of
Subpart B if multiple disclosures are in close proximity to one another
and a sender can reasonably determine how to calculate the total amount
of the transaction, and the amount that will be received by the
designated recipient. Model Forms A-30 through A-35 in Appendix A
illustrate how information may be grouped to comply with the rule, but
a remittance transfer provider may group the information in another
manner. For example, a provider could provide the grouped information
as a horizontal, rather than a vertical, calculation.
Paragraph 31(c)(4)--Segregation
1. Segregation. Disclosures may be segregated from other
information in a variety of ways. For example, the disclosures may
appear on a separate sheet of paper or may be set off from other
information on a notice by outlining them in a box or series of boxes,
bold print dividing lines, or a different color background.
2. Directly related. For purposes of Sec. 205.31(c)(4), the
following is directly related information:
i. The date and/or time of the transaction;
ii. The sender's name and contact information;
iii. The location at which the designated recipient may pick up the
funds;
iv. The confirmation or other identification code;
v. A company name or logo;
vi. An indication that a disclosure is or is not a receipt or other
indicia of proof of payment;
vii. A designated area for signatures or initials; and
viii. A statement that funds may be available sooner, as permitted
by Sec. 205.31(b)(2)(ii).
31(d) Estimates
1. Terms. A remittance transfer provider may provide estimates of
the amounts required by Sec. 205.31(b), to the extent permitted by
Sec. 205.32. An estimate must be described using the term
``Estimated'' or a substantially similar term and in close proximity to
the term or terms described. For example, a remittance transfer
provider could describe an estimated disclosure as ``Estimated Transfer
Amount,'' ``Other Estimated Fees and Taxes,'' or ``Total to Recipient
(Est.).''
31(e) Timing
1. Request to send a remittance transfer. Pre-payment and combined
disclosures are required to be provided to the sender when the sender
requests the remittance transfer, but prior to payment for the
remittance transfer. Whether a sender has requested a remittance
transfer depends on the facts and circumstances. A sender that asks a
provider to send a remittance transfer, and provides transaction-
specific information to the provider in order to send funds to a
designated recipient, has requested a remittance transfer. For example,
a sender who asks the provider to send money to a recipient in Mexico
and provides the sender and recipient information to the provider has
requested a remittance transfer. A sender who solely inquires about
that day's rates and fees, however, has not requested the provider to
send a remittance transfer.
2. When payment is made. A receipt required by Sec. 205.31(b)(2)
is required to be provided to the sender when payment is made for the
remittance transfer. For example, a remittance transfer provider could
give the sender a receipt after the consumer pays for the remittance
transfer, but before the sender leaves the counter. A provider could
also give the sender a receipt immediately before the sender pays for
the transaction.
3. Telephone transfer from an account. A sender may transfer funds
from his or her account, as defined by Sec. 205.2(b), that is held by
the remittance transfer provider. For example, a financial institution
may send an international wire transfer for a sender using funds from
the sender's account with the institution. If the sender conducts such
a transfer entirely by telephone, the institution may provide a written
receipt on or with the sender's next regularly scheduled periodic
statement or within 30 days after payment is made for the remittance
transfer if a periodic statement is not required.
31(f) Accurate When Payment Is Made
1. No guarantee of disclosures provided before payment. Disclosures
required by Sec. 205.31(b) are required to be accurate when a sender
pays for the remittance transfer. A remittance transfer provider is not
required to guarantee the terms of the remittance transfer in the
disclosures required by Sec. 205.31(b) for any specific period of
time. However, if any of the disclosures required by Sec. 205.31(b)
are not accurate when a sender pays for the remittance transfer, a
provider must give new disclosures before receiving payment for the
remittance transfer.
31(g) Foreign Language Disclosures
1. Number of foreign languages used in written disclosure. Section
205.31(g)(1) does not limit the number of languages that may be used on
a single document, but a single written document containing more than
three languages is not likely to be helpful to a consumer. Section
205.31(g)(3), however, does limit the languages that may be used on the
written receipts provided to the sender to English and, if applicable,
the foreign language primarily used by the sender with the remittance
transfer provider to conduct the transaction. See comment 31(g)-2 for
guidance on the language a sender
[[Page 29957]]
primarily uses with the remittance transfer provider to conduct the
transaction. Under Sec. 205.31(g)(1), a remittance transfer provider
may, but need not, provide the consumer with a written or electronic
disclosure that is in English and in each foreign language that the
remittance transfer provider principally uses to advertise, solicit, or
market either orally, in writing, or electronically, at that office.
Alternatively, the remittance transfer provider may provide the
disclosure solely in English and, if applicable, the foreign language
primarily used by the sender with the remittance transfer provider to
conduct the transaction or assert an error, provided such language is
principally used by the remittance transfer provider to advertise,
solicit, or market either orally, in writing, or electronically, at
that office. If the remittance transfer provider chooses the
alternative method, it may provide disclosures in a single document
with both languages or in two separate documents with one document in
English and the other document in the applicable foreign language. The
following examples illustrate this concept.
i. A remittance transfer provider principally uses only Spanish and
Vietnamese to advertise, solicit, or market remittance transfer
services at a particular office. The remittance transfer provider may
provide all of its consumers with disclosures in English, Spanish, and
Vietnamese, regardless of the language the sender uses with the
remittance transfer provider to conduct the transaction or assert an
error.
ii. Same facts as i. If a sender primarily uses Spanish with the
remittance transfer provider to conduct a transaction or assert an
error, the remittance transfer provider may provide a written or
electronic disclosure in English and Spanish, whether in a single
document or two separate documents. If the sender primarily uses
English with the remittance transfer provider to conduct the
transaction or assert an error, the remittance transfer provider may
provide a written or electronic disclosure solely in English. If the
sender primarily uses a foreign language with the remittance transfer
provider to conduct the transaction or assert an error that the
remittance transfer provider does not use to advertise, solicit, or
market either orally, in writing, or electronically, at that office,
the remittance transfer provider may provide a written or electronic
disclosure solely in English.
2. Primarily used. The language primarily used by the sender with
the remittance transfer provider to conduct the transaction is the
primary language used by the sender with the remittance transfer
provider to convey the information necessary to complete the
transaction. Similarly, the language primarily used by the sender with
the remittance transfer provider to assert the error is the primary
language used by the sender with the remittance transfer provider to
provide the information required by Sec. 205.33(b) to assert an error.
For example:
i. A sender initiates a conversation with a remittance transfer
provider with a word of greeting in English and expresses interest in
sending a remittance transfer to Mexico in English. If, based on that
knowledge, the remittance transfer provider offers to communicate with
the sender in Spanish and the sender conveys the other information
needed to complete the transaction, including the designated
recipient's information and the amount and funding source of the
transfer, in Spanish, then Spanish is the language primarily used by
the sender with the remittance transfer provider to conduct the
transaction.
ii. A sender initiates a conversation with the remittance transfer
provider with a word of greeting in English and states in English that
there was a problem with a prior remittance transfer to Vietnam. If,
based on that knowledge, the remittance transfer provider offers to
communicate with the sender in Vietnamese and the sender uses
Vietnamese to convey the information required by Sec. 205.33(b) to
assert an error, then Vietnamese is the language primarily used by the
sender with the remittance transfer provider to assert the error.
Paragraph 31(g)(1)--General
1. Principally used. i. All relevant facts and circumstances
determine whether a foreign language is principally used by the
remittance transfer provider to advertise, solicit, or market under
Sec. 205.31(g)(1). Generally, whether a foreign language is considered
to be principally used by the remittance transfer provider to
advertise, solicit, or market is based on:
A. The frequency with which the foreign language is used in
advertising, soliciting, or marketing of remittance transfer services
at that office;
B. The prominence of the advertising, soliciting, or marketing of
remittance transfer services in that foreign language at that office;
and
C. The specific foreign language terms used in the advertising
soliciting, or marketing of remittance transfer service at that office.
ii. For example, an advertisement for remittance transfer services,
including rate and fee information, that is featured prominently at an
office and is entirely in English, except for a sentence advising
consumers to ``Ask us about our foreign remittance services'' in a
foreign language, may create an expectation that a consumer could
receive information on remittance transfer services in the foreign
language used in the advertisement. The foreign language used in such
an advertisement would be considered to be principally used at that
office based on the prominence of the advertising and the specific
foreign language terms inviting consumers to inquire about remittance
transfer services. In contrast, an advertisement for remittance
transfer services, including rate and fee information, that is featured
prominently at an office and is entirely in English, except for one
word of greeting in a foreign language, may not create an expectation
that a consumer could receive information on remittance transfer
services in the foreign language used for such greeting. The foreign
language used in such an advertisement is not considered to be
principally used at that office based on the incidental specific
foreign language term used.
2. Advertise, solicit, or market. i. Any commercial message in a
foreign language, appearing in any medium, that promotes directly or
indirectly the availability of remittance transfer services constitutes
advertising, soliciting, or marketing in such foreign language for
purposes of Sec. 205.31(g)(1). Examples illustrating when a foreign
language is used to advertise, solicit, or market include:
A. Messages in a foreign language in a leaflet or promotional flyer
at an office.
B. Announcements in a foreign language on a public address system
at an office.
C. On-line messages in a foreign language, such as on the Internet.
D. Printed material in a foreign language on any exterior or
interior sign at an office.
E. Point-of-sale displays in a foreign language at an office.
F. Telephone solicitations in a foreign language.
ii. Examples illustrating when a foreign language is not
principally used to advertise, solicit, or market include:
A. Communicating in a foreign language (whether by telephone,
electronically, or otherwise) about remittance transfer services in
response to a consumer-initiated inquiry.
[[Page 29958]]
B. Making disclosures in a foreign language that are required by
Federal or other applicable law.
3. Office. An office includes any physical location, telephone
number, or Web site of a remittance transfer provider where remittance
transfer services are offered to consumers. The location need not
exclusively offer remittance transfer services. For example, if an
agent of a remittance transfer provider is located in a grocery store,
the grocery store is considered an office for purposes of Sec.
205.31(g)(1).
4. At that office. Any advertisement, solicitation, or marketing is
considered to be made at that office if such advertisement,
solicitation, or marketing is posted, provided, or made: at a physical
office of a remittance transfer provider; on a Web site of a remittance
transfer provider; or during a telephone call with the remittance
transfer provider. For disclosures provided pursuant to Sec. 205.33
for error resolution purposes, the relevant office is the office in
which the sender first asserts the error, not the office where the
transaction was conducted.
Section 205.32--Estimates
32(a) Temporary Exception for Insured Institutions
Paragraph 32(a)(1)--General
1. For reasons beyond its control. An insured institution cannot
determine exact amounts ``for reasons beyond its control'' when:
i. The exchange rate required to be disclosed under Sec.
205.31(b)(1)(iv) is set by a person with which the insured institution
has no correspondent relationship after the insured institution sends
the remittance transfer; or
ii. Fees required to be disclosed under Sec. 205.31(b)(1)(vi) are
imposed by intermediary institutions along the transmittal route and
the insured institution has no correspondent relationship with those
institutions.
2. Examples of scenarios that qualify for the temporary exception.
The following examples illustrate when an insured institution cannot
determine an exact amount ``for reasons beyond its control'' and, thus,
would qualify for the temporary exception.
i. Exchange rate. An insured institution cannot determine the exact
exchange rate required to be disclosed under Sec. 205.31(b)(1)(iv) for
an international wire transfer if the insured institution does not set
the exchange rate, and the rate is instead later set by the designated
recipient's institution with which the insured institution does not
have a correspondent relationship. The insured institution will not
know the date on which funds will be deposited into the recipient's
account, and will not know the exchange rate that will be applied on
that date.
ii. Other fees. An insured institution cannot determine the exact
fees required to be disclosed under Sec. 205.31(b)(1)(vi) if an
intermediary institution or the designated recipient's institution,
with which the insured institution does not have a correspondent
relationship, imposes a transfer or conversion fee.
iii. Other taxes. An insured institution cannot determine the exact
taxes required to be disclosed under Sec. 205.31(b)(1)(vi) if the
insured institution cannot determine the applicable exchange rate or
fees as described in i. and ii. above, and the recipient country
imposes a tax that is a percentage of the amount transferred to the
designated recipient, less any other fees.
3. Examples of scenarios that do not qualify for the temporary
exception. The following examples illustrate when an insured
institution can determine exact amounts and, thus, would not qualify
for the temporary exception.
i. Exchange rate. An insured institution can determine the exact
exchange rate required to be disclosed under Sec. 205.31(b)(1)(iv) if
it converts the funds into the local currency to be received by the
designated recipient using an exchange rate that it sets.
ii. Other fees. An insured institution can determine the exact fees
required to be disclosed under Sec. 205.31(b)(1)(vi) if it has
negotiated specific fees with a correspondent institution, and this
correspondent institution is the only institution in the transmittal
route to the designated recipient's institution.
iii. Other taxes. An insured institution can determine the exact
taxes required to be disclosed under Sec. 205.31(b)(1)(vi) if:
A. The recipient country imposes a tax that is a percentage of the
amount transferred to the designated recipient, less any other fees,
and the insured institution can determine the exact amount of the
applicable exchange rate and other fees; or
B. The recipient country imposes a tax that is a flat amount that
is not tied to the amount transferred.
32(b) Permanent Exception for Transfers to Certain Countries
Paragraph 32(b)(1)
1. Laws of the recipient country. The ``laws of the recipient
country'' do not permit a remittance transfer provider to determine
exact amounts required to be disclosed when a law or regulation of the
recipient country requires the person making funds directly available
to the designated recipient to apply an exchange rate that is:
i. Set by the government of the recipient country after the
remittance transfer provider sends the remittance transfer, or
ii. Set when the designated recipient claims the funds.
2. Examples illustrating application of the ``laws of the recipient
country'' exception.
i. The ``laws of the recipient country'' do not permit a remittance
transfer provider to determine the exact exchange rate required to be
disclosed under Sec. 205.31(b)(1)(iv) when, for example, the
government of the recipient country sets the exchange rate daily and
the funds are made available to the designated recipient in the local
currency the day after the remittance transfer provider sends the
remittance transfer.
ii. In contrast, the ``laws of the recipient country'' permit a
remittance transfer provider to determine the exact exchange rate
required to be disclosed under Sec. 205.31(b)(1)(iv) when, for
example, the government of the recipient country pegs the value of its
currency to the U.S. dollar.
Paragraph 32(b)(2)
1. Method by which transactions are made in the recipient country.
The ``method by which transactions are made in the recipient country''
does not permit a remittance transfer provider to determine exact
amounts required to be disclosed when transactions are sent via
international ACH on terms negotiated between the United States
government and the recipient country's government, under which the
exchange rate is set by the recipient country's central bank after the
provider sends the remittance transfer.
2. Examples of illustrating application of the ``methods''
exception.
i. The ``method by which transactions are made in the recipient
country'' does not permit a remittance transfer provider to determine
the exact exchange rate required to be disclosed under Sec.
205.31(b)(1)(iv) when the provider sends a remittance transfer via
international ACH on terms negotiated between the United States
government and the recipient country's government, under which the
exchange rate is set by the recipient country's central bank on the
business day after the provider has sent the remittance transfer.
ii. In contrast, a remittance transfer provider would not qualify
for the Sec. 205.32(b)(2) ``methods'' exception if it sends a
remittance transfer via international ACH on terms negotiated
[[Page 29959]]
between the United States government and a private-sector entity or
entities in the recipient country, under which the exchange rate is set
by the institution acting as the entry point to the recipient country's
payments system on the next business day. However, a remittance
transfer provider sending a remittance transfer using such a method may
qualify for the Sec. 205.32(a) temporary exception.
iii. A remittance transfer provider would not qualify for the Sec.
205.32(b)(2) ``methods'' exception if, for example, it sends a
remittance transfer via international ACH on terms negotiated between
the United States government and the recipient country's government,
under which the exchange rate is set by the recipient country's central
bank before the sender requests a transfer.
32(c) Bases for Estimates
Paragraph 32(c)(1)(i)
1. Most recent exchange rate for qualifying international ACH
transfers. If the exchange rate for a remittance transfer sent via
international ACH that qualifies for the Sec. 205.32(b)(2) exception
is set the following business day, the most recent exchange rate
available for a transfer will be the exchange rate set for the day that
the disclosure is provided, i.e. the current business day's exchange
rate.
Paragraph 32(c)(1)(ii)
1. Publicly available. Examples of publicly available sources of
information containing the most recent wholesale exchange rate for a
currency include U.S. news services, such as Bloomberg, the Wall Street
Journal, and the New York Times, a recipient country's national news
services, and a recipient country's central bank or other government
agency.
Paragraph 32(c)(3)(ii)
1. Potential transmittal routes. A remittance transfer from the
sender's account at an insured institution to the designated
recipient's institution may take several routes, depending on the
correspondent relationships each institution in the transmittal route
has with other institutions. In providing an estimate of the fees
required to be disclosed under Sec. 205.31(b)(1)(vi) pursuant to the
Sec. 205.32(a) temporary exception, an insured institution may rely
upon the representations of the institutions that act as intermediaries
in any one of the potential transmittal routes that it reasonably
believes a requested remittance transfer may travel.
Paragraph 32(c)(4)
1. Other taxes imposed in a recipient country that are a
percentage. Section 205.32(c)(4) sets forth the basis for providing an
estimate of only those taxes imposed in a recipient country that are a
percentage of the amount transferred to the designated recipient
because a remittance transfer provider can determine the exact amount
of other taxes, such as a flat tax.
Section 205.33--Procedures for Resolving Errors
33(a) Definition of Error
1. Incorrect amount of currency sent. Section 205.33(a)(1)(i)
covers circumstances in which a sender pays an amount that differs from
the total transaction amount, including fees imposed in connection with
the transfer, stated in the receipt or combined disclosure provided
under Sec. 205.31(b)(2) or (b)(3). Such error may be asserted by a
sender regardless of the form or method of payment tendered, including
when a debit, credit, or prepaid card is used to fund the transfer and
an excess amount is paid. For example, if a remittance transfer
provider incorrectly charged a sender's credit card account for $150 to
send $120 to the sender's relative in a foreign country, plus a
transfer fee of $10, and the provider sent only $120, the sender could
assert an error with the remittance transfer provider for the incorrect
charge under Sec. 205.33(a)(1)(i).
2. Incorrect amount of currency received--coverage. Section
205.33(a)(1)(iii) covers circumstances in which the designated
recipient receives an amount of currency that differs from the amount
of currency identified on the disclosures provided to the sender,
except where the disclosure stated an estimate of the amount of
currency to be received in accordance with Sec. 205.32. A designated
recipient may receive an amount of currency that differs from the
amount of currency disclosed, for example, if an exchange rate other
than the disclosed rate is applied to the remittance transfer or if the
provider fails to account for fees or taxes that may be imposed by the
provider or a third party before the transfer is picked up by the
designated recipient or deposited into the recipient's account in the
foreign country. Section 205.33(a)(1)(iii) also covers circumstances in
which the remittance transfer provider transmits an amount that differs
from the amount requested by the sender.
3. Incorrect amount of currency received--examples. For purposes of
the following examples illustrating the error for an incorrect amount
of currency received under Sec. 205.33(a)(1)(iii), assume that none of
the circumstances permitting an estimate under Sec. 205.32 apply
(unless otherwise stated).
i. A consumer requests to send funds to a relative in Mexico to be
received in local currency. Upon receiving the sender's payment, the
remittance transfer provider provides a receipt indicating that the
amount of currency that will be received by the designated recipient
will be 1180 Mexican pesos, after fees and taxes are applied. However,
when the relative picks up the transfer in Mexico a day later, he only
receives 1150 Mexican pesos because the exchange rate applied by the
recipient agent in Mexico was lower than the exchange rate disclosed on
the receipt. Because the designated recipient has received less than
the amount of currency disclosed on the receipt, an error has occurred.
ii. A consumer requests to send funds to a relative in Colombia to
be received in local currency. The remittance transfer provider
provides the sender a receipt stating an amount of currency that will
be received by the designated recipient, which does not reflect
additional foreign taxes that will be imposed in Colombia on the
transfer. Because the designated recipient will receive less than the
amount of currency disclosed on the receipt, an error has occurred.
iii. Same facts as in ii., except that the receipt provided by the
remittance transfer provider does not reflect additional fees that are
imposed by the receiving agent in Colombia on the transfer. Because the
designated recipient will receive less than the amount of currency
disclosed on the receipt, an error has occurred.
iv. A consumer requests to send US$250 to a relative in India to an
U.S. dollar-denominated account held by the relative at an Indian bank.
Instead of the US$250 disclosed on the receipt as the amount to be
sent, the remittance transfer provider sends US$200, resulting in a
smaller deposit to the designated recipient's account than was
disclosed as the amount to be received after fees and taxes. Because
the designated recipient received less than the amount of currency that
was disclosed, an error has occurred.
v. A consumer requests to send US$100 to a relative in Brazil to be
received in local currency. The remittance transfer provider provides
the sender a receipt that discloses an estimated exchange rate, other
taxes, and amount of currency that will be received due to Brazilian
law requiring that the exchange rate be set by the
[[Page 29960]]
Brazilian central bank. When the relative picks up the remittance
transfer, the relative receives less currency than the estimated amount
disclosed to the sender on the receipt. Because Sec. 205.32(b) permits
the remittance transfer provider to disclose an estimate of the amount
of currency to be received, no error has occurred unless the estimate
was not based on an approach set forth under Sec. 205.32(c).
4. Failure to make funds available by stated date of availability--
coverage. Section 205.33(a)(1)(iv) generally covers disputes about the
failure to make funds available in connection with a remittance
transfer to a designated recipient by the stated date of availability.
The following are examples of errors for failure to make funds
available by the stated date of availability (assuming that neither of
the exceptions in Sec. 205.33(a)(1)(iv)(A) or (B) apply).
i. Late or non-delivery of a remittance transfer;
ii. Delivery of funds to the wrong account;
iii. The fraudulent pick-up of a remittance transfer in a foreign
country by a person other than the designated recipient;
iv. The recipient agent or institution's retention of funds in
connection with a remittance transfer, instead of making the funds
available to the designated recipient.
5. Extenuating circumstances. Under Sec. 205.33(a)(1)(iv)(A), a
remittance transfer provider's failure to deliver or transmit a
remittance transfer by the stated date of availability is not an error
if such failure was caused by circumstances beyond the provider's
control. Examples of circumstances beyond a remittance transfer
provider's control under Sec. 205.33(a)(1)(iv)(A) include
circumstances such as war or civil unrest, natural disaster, and
government actions or restrictions that could not have been reasonably
anticipated by the remittance transfer provider, such as the imposition
of foreign currency controls or garnishment or attachment of funds
after the transfer is sent.
6. Incorrect information provided for transfer. Under Sec.
205.33(a)(1)(iv)(B), a remittance transfer provider's failure to make
funds in connection with a remittance transfer available to a
designated recipient by the stated date of availability is not an error
if such failure occurred because the sender provided incorrect
information in connection with the transfer, such as by erroneously
identifying the designated recipient or the recipient's account number,
provided that the remittance transfer provider also gives the sender
the opportunity to correct the information and send the transfer at no
additional cost. However, an error may be asserted under Sec.
205.33(a)(1)(iv) if the failure to make funds available was caused by
the provider's miscommunication of information necessary for the
designated recipient to pick up the transfer. For example, an error
under Sec. 205.33(a)(1)(iv) could occur if the provider discloses the
incorrect location where the transfer may be picked up or gives the
wrong confirmation number/code for the transfer.
33(b) Notice of Error From Sender
1. Person asserting or discovering error. The error resolution
procedures of this section apply only when a notice of error is
received from the sender, and not when a notice of error is received
from the designated recipient or when the remittance transfer provider
itself discovers and corrects an error.
2. Content of error notice. The notice of error is effective so
long as the remittance transfer provider is able to identify the
remittance transfer in question. For example, the sender could provide
the confirmation number or code that would be used by the designated
recipient to pick up the transfer, or other identification number or
code supplied by the remittance transfer provider in connection with
the transfer, if such number or code is sufficient for the remittance
transfer provider to identify the transfer.
3. Address on notice of error. A remittance transfer provider may
request, or a sender may provide, the sender's or designated
recipient's e-mail address, as applicable, instead of a physical
address, on a notice of error if such e-mail address would be
sufficient to enable the provider to identify the remittance transfer
to which the notice applies.
4. Effect of late notice. A remittance transfer provider is not
required to comply with the requirements of this section for any notice
of error from a sender that is received by the provider more than 180
days from the stated date of availability of the remittance transfer to
which the notice of error applies.
5. Notice of error provided to agent. A notice of error provided by
a sender to an agent of the remittance transfer provider is deemed to
be received by the provider under Sec. 205.33(b)(1)(i) when received
by the agent.
6. Consumer notice of error resolution rights. Section 205.31
requires a remittance transfer provider to include an abbreviated
notice of the consumer's error resolution rights on the receipt or
combined notice given under Sec. 205.31(b)(2) or (b)(3). In addition,
the remittance transfer provider must make available to a sender upon
request, a notice providing a full description of the sender's error
resolution rights that is substantially similar to the model error
resolution and cancellation notice set forth in Appendix A of this part
(Model Form A-36).
33(c) Time Limits and Extent of Investigation
1. Notice to sender of finding of error. If the remittance transfer
provider determines during its investigation that an error occurred as
described by the sender, the remittance provider may inform the sender
of its findings either orally or in writing. However, if the provider
determines that no error or a different error occurred, the provider
must provide a written explanation of its findings under Sec.
205.33(d)(1).
2. Designation of requested remedy. Under Sec. 205.33(c)(2), the
sender may choose to obtain a refund of the amount of funds that was
not properly transmitted or delivered to the designated recipient or
request redelivery of the amount appropriate to correct the error at no
additional cost. Upon receiving the sender's request, the remittance
transfer provider shall correct the error within one business day or as
soon as reasonably practicable, applying the same currency rate and
fees stated in the disclosure provided under Sec. 205.31(b)(2) or
(b)(3), if the sender requests delivery of the amount appropriate to
correct the error. The remittance transfer provider may also request
that the sender indicate the preferred remedy at the time the sender
provides notice of the error. However, if the sender does not indicate
the desired remedy at the time of providing notice of error, the
remittance transfer provider must notify the sender of any available
remedies in the report provided under Sec. 205.33(c)(1) if the
provider determines an error occurred.
3. Remedies for incorrect amount paid. If an error asserted under
Sec. 205.33(a)(1)(i) occurred as alleged by the sender, the sender may
request a refund of the amount necessary to resolve the error from the
remittance provider under Sec. 205.33(c)(2)(i) or that the remittance
transfer provider make that amount available to the designated
recipient at no additional cost under Sec. 205.33(c)(2)(ii).
4. Correction of an error if funds not available by stated date. If
the remittance transfer provider determines an error occurred as
asserted under Sec. 205.33(a)(1)(iv), it must correct the error
including refunding any fees
[[Page 29961]]
imposed for the transfer, whether the fee was imposed by the provider
or a third party involved in sending the transfer, such as an
intermediary bank involved in sending a wire transfer or the
institution from which the funds are picked up.
5. Charges for error resolution. If an error occurred, whether as
alleged or in a different amount or manner, the remittance transfer
provider may not impose a charge related to any aspect of the error
resolution process (including charges for documentation or
investigation).
6. Correction without investigation. A remittance transfer provider
may correct an error, without investigation, in the amount or manner
alleged by the sender, or otherwise determined, to be in error, but
must comply with all other applicable requirements of Sec. 205.33.
33(d) Procedures if Remittance Transfer Provider Determines no Error or
Different Error Occurred
1. Error different from that alleged. When a remittance transfer
provider determines that an error occurred in a manner or amount
different from that described by the sender, it must comply with the
requirements of both Sec. Sec. 205.33(c) and (d), as applicable. The
provider may give the notice of correction and the explanation
separately or in a combined form.
33(e) Reassertion of Error
1. Withdrawal of error; right to reassert. The remittance transfer
provider has no further error-resolution responsibilities if the sender
voluntarily withdraws the notice alleging an error. A sender who has
withdrawn an allegation of error has the right to reassert the
allegation unless the remittance transfer provider had already complied
with all of the error resolution requirements before the allegation was
withdrawn. The sender must do so, however, within the original 180-day
period from the stated date of availability.
33(f) Relation to Other Laws
1. Concurrent error obligations. Section 205.33(f)(1) applies only
when an error may be asserted under both Sec. Sec. 205.11 and 205.33
with a financial institution that is also the remittance transfer
provider. For example, if a sender asserts an error under Sec. 205.11
with a remittance transfer provider that holds the sender's account,
and the error is not also an error under Sec. 205.33 (such as in the
case of the omission of an EFT on a periodic statement), then the
error-resolution provisions of Sec. 205.11 exclusively apply to the
error.
2. Assertion of same error with multiple parties. If a sender
receives credit to correct an error of an incorrect amount paid in
connection with a remittance transfer from either the remittance
transfer provider or account-holding institution (or creditor), and
subsequently asserts the same error with another party, that party has
no further responsibilities to investigate the error because the sender
has received sufficient credit to correct the error. For example,
assume that a sender initially asserts an error with a remittance
transfer provider with respect to a remittance transfer alleging that
$130 was debited from his checking account, but the sender only
requested a remittance transfer for $100, plus a $10 transfer fee. If
the remittance transfer provider refunds $20 to the sender to correct
the error, and the sender subsequently asserts the same error with his
account-holding institution, the account-holding institution has no
error resolution responsibilities under Regulation E because the
consumer sender has already received sufficient credit to correct the
error. In addition, nothing in this section prevents an account-holding
institution or creditor from reversing amounts it has previously
credited to correct an error if a consumer receives more than one
credit to correct the same error. For example, assume that a sender
concurrently files notice of error with his or her account-holding
institution and remittance transfer provider for the same error, and
the sender receives credit from the account-holding institution for the
error within 45 days of the notice of error. If the remittance transfer
provider subsequently provides a credit to the sender for the same
error, the account-holding institution may reverse the amounts it had
previously credited to the consumer's account even after the 45-day
error resolution period under Sec. 205.11.
33(g) Error Resolution Standards and Recordkeeping Requirements
1. Record retention requirements. Remittance transfer providers are
subject to the record retention requirements under Sec. 205.13, and
must retain documentation, including documentation related to error
investigations, for a period of not less than two years from the date a
notice of error was submitted to the provider or action was required to
be taken by the provider. A remittance transfer provider need not
maintain records of individual disclosures that it has provided to each
sender; it need only retain records that ensure that it can comply with
a sender's request for documentation or other information relating to a
particular remittance transfer, including a request for supporting
documentation to enable the sender to determine whether an error exists
with respect to that transfer.
Section 205.34--Procedures for Cancellation and Refund of Remittance
Transfers 34(a) Sender Right of Cancellation and Refund
1. Content of cancellation request. A request to cancel a
remittance transfer is valid so long as the remittance transfer
provider is able to identify the remittance transfer in question. For
example, the sender could provide the confirmation number or code that
would be used by the designated recipient to pick up the transfer or
other identification number or code supplied by the remittance transfer
provider in connection with the transfer, if such number or code is
sufficient for the remittance transfer provider to identify the
transfer. A remittance transfer provider may also request, or the
sender may provide, the sender's e-mail address instead of a physical
address, so long as the remittance transfer provider is able to
identify the transfer to which the request to cancel applies.
2. Consumer notice of cancellation right. Section 205.31 requires a
remittance transfer provider to include an abbreviated notice of the
consumer's right to cancel a remittance transfer on the receipt or
combined disclosure given under Sec. 205.31(b)(2) or (b)(3). In
addition, the remittance transfer provider must make available to a
sender upon request, a notice providing a full description of the right
to cancel a remittance transfer that is substantially similar to the
model error resolution and cancellation notice set forth in Appendix A
of this part (Model Form A-36).
34(b) Time Limits and Refund Requirements
1. Form of refund. At its discretion, a remittance transfer
provider may issue a refund in cash or in the same form of payment that
was initially tendered by the sender for the remittance transfer. For
example, if the sender originally provided a credit card as payment for
the transfer, the remittance transfer provider may issue a credit to
the sender's credit card account in the amount of the payment.
2. Fees refunded. If a sender provides a timely request to cancel a
remittance transfer, a remittance transfer provider must refund all
funds tendered by the sender in connection with the remittance
transfer, including any fees that have been imposed for the transfer,
whether the fee was assessed by the
[[Page 29962]]
provider or a third party, such as an intermediary institution or the
receiving agent or bank.
Section 205.35--Acts of Agents
Alternative A
1. General. Remittance transfer providers must comply with the
requirements of this subpart, including, but not limited to, providing
the disclosures set forth in Sec. 205.31 and providing any remedies as
set forth in Sec. 205.33, even if a remittance transfer provider
performs its functions through an agent, and regardless of whether the
provider has an agreement with a third party that transfers or
otherwise makes funds available to a designated recipient.
Alternative B
1. General. Remittance transfer providers generally must comply
with the requirements of this subpart, including, but not limited to,
providing the disclosures set forth in Sec. 205.31 and remedying any
errors as set forth in Sec. 205.33, even if a remittance transfer
provider performs its functions through an agent, and regardless of
whether the provider has an agreement with a third party that transfers
or otherwise makes funds available to a designated recipient.
2. Policies and procedures. Under Sec. 205.35(a), a remittance
transfer provider that performs its functions through an agent must
establish and maintain written policies and procedures for compliance
with this subpart applicable to its agents. Maintenance of policies and
procedures includes periodic review of and, as needed, updates to such
policies and procedures. Appropriate oversight practices include, for
example, regular audits, training, and other measures designed to
ensure an agent's compliance with this subpart. Under these
circumstances, a provider has not violated its obligations under
Subpart B if its agent fails to follow the policies and procedures in
an individual case, so long as the remittance transfer provider makes
the consumer whole for any error resulting from an agent's acts,
including as set forth under the error resolution provisions in Sec.
205.33.[ltrif]
Appendix A--Model Disclosure Clauses and Forms
* * * * *
2. Use of forms. The appendix contains model disclosure clauses for
optional use by financial institutions [rtrif]and remittance transfer
providers[ltrif] to facilitate compliance with the disclosure
requirements of sections 205.5(b)(2) and (b)(3), 205.6(a), 205.7,
205.8(b), 205.14(b)(1)(ii), 205.15(d)(1) and (d)(2), [and] 205.18(c)(1)
and (c)(2)[rtrif], and Sec. 205.31(b)[ltrif]. The use of appropriate
clauses in making disclosures will protect a financial institution
[rtrif]and a remittance transfer provider[ltrif] from liability under
sections [915 and] 916 [rtrif]and 917[ltrif] of the act provided the
clauses accurately reflect the institution's EFT services [rtrif]and
the provider's remittance transfer services, respectively[ltrif].
* * * * *
[rtrif]4. Altering the model forms for remittance transfers. This
appendix contains twelve model forms for use in connection with
remittance transfers. These model forms are intended to demonstrate
several formats a remittance transfer provider may use to comply with
the requirements of Sec. 205.31(b). Model Forms A-30 through A-32
demonstrate how a provider could provide the required disclosures for a
remittance transfer exchanged into local currency. Model Forms A-33
through A-35 demonstrate how a provider could provide the required
disclosures for dollar-to-dollar remittance transfers. These forms also
demonstrate disclosure of the required content, in accordance with the
grouping and proximity requirements of Sec. Sec. 205.31(c)(1) and (2),
in both a register receipt format and an 8.5 inch by 11 inch format.
Model Form A-36 provides long-form model error resolution and
cancellation disclosures required by Sec. 205.31(d), and Model Form A-
37 provides short-form model error resolution and cancellation
disclosures required by Sec. 205.31(b)(2)(iv). Model Forms A-38
through A-41 provide language for Spanish language disclosures.
i. The model forms contain information that is not required by
Subpart B, such as a confirmation code and the sender's name and
contact information. Additional information not required by Subpart B
may be presented on the model forms as permitted by Sec. 205.31(c)(4).
Any additional information must be presented consistent with a
remittance transfer provider's obligation to provide required
disclosures in a clear and conspicuous manner.
ii. Use of the model forms is optional. A remittance transfer
provider may change the forms by rearranging the format or by making
modifications to the language of the forms, in each case without
modifying the substance of the disclosures. Any rearrangement or
modification of the format of the model forms must be consistent with
the form, grouping, proximity, and other requirements of Sec. Sec.
205.31(a) and (c). Providers making revisions that do not comply with
this section will lose the benefit of the safe harbor for appropriate
use of Model Forms A-30 to A-41.
iii. Permissible changes to the language and format of the model
forms include, for example:
A. Substituting the information entered into the model forms
intended to demonstrate how to complete the information in the model
forms--such as names, addresses, and Web sites; dates; numbers; and
state-specific contact information--with information applicable to the
remittance transfer.
B. Eliminating disclosures that are not applicable to the transfer,
as permitted under Sec. 205.31(b).
C. Correcting or updating telephone numbers, mailing addresses, or
Web site addresses that may change over time.
D. Providing the disclosures on a paper size that is different from
a register receipt and 8.5 inch by 11 inch formats.
E. Adding a term substantially similar to ``estimated'' in close
proximity to the specified terms in Sec. Sec. 205.31(b)(1) and (b)(2),
as permitted under Sec. 205.31(d).
F. Providing the disclosures in a foreign language, or multiple
foreign languages, subject to the requirements of Sec. 205.31(g).
iv. Changes to the model forms that are not permissible include,
for example, adding information that is not segregated from the
required disclosures, other than as permitted by Sec.
205.31(c)(4).[ltrif]
By order of the Board of Governors of the Federal Reserve
System, May 11, 2011.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2011-12019 Filed 5-20-11; 8:45 am]
BILLING CODE 6210-01-P