[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

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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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \28\ Commercial wire transfers are not affected because a 
``sender'' must be a consumer.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \29\ See Credit Card Act Sec.  402, Public Law 111-24, 123 Stat. 
1734 (2009).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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