[Federal Register Volume 89, Number 189 (Monday, September 30, 2024)]
[Proposed Rules]
[Pages 79456-79474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-22004]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 89, No. 189 / Monday, September 30, 2024 /
Proposed Rules
[[Page 79456]]
CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Part 1005
[Docket No. CFPB-2024-0045]
Remittance Transfers Under the Electronic Fund Transfer Act
(Regulation E)
AGENCY: Consumer Financial Protection Bureau.
ACTION: Proposed rule; request for public comment.
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SUMMARY: The Consumer Financial Protection Bureau (CFPB) proposes a
narrowly tailored amendment to certain remittance transfer disclosure
requirements in the remittance rule in Regulation E (Remittance Rule or
Rule), which implements the Electronic Fund Transfer Act, and certain
accompanying model forms, to ensure that consumers sending a remittance
transfer have information about the types of inquiries that may be most
efficient to direct to the CFPB and the State agency that licenses or
charters their remittance transfer provider.
DATES: Comments must be received on or before November 4, 2024.
ADDRESSES: You may submit comments, identified by Docket No. [CFPB-
2024-0045], by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. A brief summary of
this document will be available at https://www.regulations.gov/docket/CFPB-2024-0045.
Email: [email protected]. Include Docket No.
CFPB-2024-0045 in the subject line of the message.
Mail/Hand Delivery/Courier: Comment Intake--2024 NPRM
REMITTANCES, c/o Legal Division Docket Manager, Consumer Financial
Protection Bureau, 1700 G Street NW, Washington, DC 20552. Because
paper mail in the Washington, DC, area and at the CFPB is subject to
delay, commenters are encouraged to submit comments electronically.
Instructions: The CFPB encourages the early submission of comments.
All submissions must include the document title and docket number. In
general, all comments received will be posted without change to https://www.regulations.gov. All submissions, including attachments and other
supporting materials, will become part of the public record and subject
to public disclosure. Proprietary information or sensitive personal
information, such as account numbers or Social Security numbers, or
names of other individuals, should not be included. Submissions will
not be edited to remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: George Karithanom, Regulatory
Implementation & Guidance Program Analyst, Office of Regulations, at
202-435-7700 or at: https://reginquiries.consumerfinance.gov/. If you
require this document in an alternative electronic format, please
contact [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
One of the primary functions of the CFPB is collecting,
investigating, and responding to consumer complaints.\1\ The Office of
Consumer Response, created by the CFPB under the Dodd-Frank Act,
maintains procedures to provide a timely response to consumers,\2\ in
writing, to complaints against \3\ or inquiries concerning a covered
person.\4\ In 2022, the CFPB received approximately 1,287,300 consumer
complaints.\5\
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\1\ 12 U.S.C. 5511(c)(2).
\2\ 12 U.S.C. 5481(4) (``The term `consumer' means an individual
or an agent, trustee, or representative acting on behalf of an
individual.'').
\3\ For the purpose of its handling of consumer complaints (and
solely for that purpose), the CFPB defines consumer complaints as
submissions that express dissatisfaction with, or communicate
suspicion of wrongful conduct by, an identifiable entity related to
a consumer's personal experience with a financial product or
service.
\4\ 12 U.S.C. 5534(a).
\5\ See CFPB, 2022 Consumer Response Annual Report (Mar. 31,
2023), https://files.consumerfinance.gov/f/documents/cfpb_2022-consumer-response-annual-report_2023-03.pdf.
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The Electronic Fund Transfer Act (EFTA) provides a basic framework
for rights, protections, liabilities and responsibilities of consumers
and providers in electronic fund transfer systems and remittance
transfers. Section 1073 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act) \6\ established a
comprehensive system of consumer protections for remittance transfers
sent by consumers in the United States to individuals and businesses in
foreign countries by adding section 919 to the EFTA which provided for
their regulation under the Act. The Dodd-Frank Act required rules
implementing section 919 of the EFTA to be issued within 18 months of
Dodd-Frank's enactment.\7\ Among other provisions, section 919 of the
EFTA requires remittance transfer providers to make disclosures to
senders of remittance transfers, pursuant to rules prescribed by the
CFPB. Specifically, section 919 requires remittance transfer providers
to provide the sender with a receipt at the time of payment showing,
among other things, the appropriate contact information for ``the State
agency that regulates the remittance transfer provider and the
[CFPB].'' \8\ The Board of Governors of the Federal Reserve System
(Federal Reserve Board) tested and proposed disclosures implementing
this requirement prior to transferring rulemaking authority to the CFPB
on July 21, 2011.\9\ On February 7, 2012, the CFPB issued a final rule
with this disclosure essentially as proposed by the Federal Reserve
Board.\10\ The disclosure requirements for receipts issued by
remittance transfer providers to senders are codified in subpart B to
Regulation E, at section 1005.31(b)(2).\11\ These disclosures also
appear on the model forms that accompany this requirement.
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\6\ Public Law 111-203, 124 stat. 1376 (2010).
\7\ See Proposed Rule, 76 FR 29902, 29906 (May 23, 2011).
\8\ 15 U.S.C. 1693o-1(a)(2)(B)(ii)(II)(bb).
\9\ See 76 FR 29902 at 29906.
\10\ See Final Remittance Rule, 77 FR 6194, 6228-29 (Feb. 7,
2012).
\11\ 12 CFR 1005.31(b)(2). Additional disclosure requirements
for subsequent transfers in a series of preauthorized remittance
transfers are codified in section 1005.36(d)(1). See 12 CFR
1005.31(d)(1).
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As relevant here, the Remittance Rule requires remittance transfer
providers to provide on applicable disclosures, including the receipt
and combined disclosure, a ``statement about the rights of the sender
regarding the resolution of errors and cancellation,'' the contact
information of the remittance transfer
[[Page 79457]]
provider,\12\ and a ``statement that the sender can contact the State
agency that licenses or charters the remittance transfer provider with
respect to the remittance transfer and the Consumer Financial
Protection Bureau for questions or complaints about the remittance
transfer provider.'' \13\
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\12\ 12 CFR 1005.31(b)(2)(iv), (v).
\13\ 12 CFR 1005.31(b)(2)(vi).
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In its notice of proposed rulemaking with respect to implementing
EFTA section 919, the Federal Reserve Board noted that with respect to
this statement, many consumer testing participants stated that they
would call the applicable State regulator, the CFPB, or both to resolve
any problems that the remittance transfer provider did not resolve.\14\
But the CFPB's experience since the Remittance Rule became effective
suggests that this likely causes consumers to contact the CFPB with
questions that are more appropriately directed to the remittance
transfer provider in the first instance, and indeed, such questions can
often only be answered by the remittance transfer provider because they
are customer inquiries related to a particular transfer for which the
CFPB lacks knowledge. Historically, following the implementation of the
Remittance Rule, as many as 35 percent of the total telephone calls
received by the CFPB's toll-free number have been these type of
questions about remittance transfers. Recent estimates show that in
2023, the CFPB received approximately 1,800 calls per month with
questions of this sort.
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\14\ 76 FR 29902, 29914 (May 11, 2011).
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The CFPB proposes amending the disclosure requirements and
corresponding model forms A-31, A-32, A-34, A-35, A-37, A-39, and A-40
so that, rather than stating that the sender can contact the State
licensing agency of the remittance transfer provider and the CFPB with
questions or complaints about the remittance transfer provider, the
revised disclosure statement would state that the sender can contact
the State licensing agency and the CFPB if the sender has unresolved
problems with the remittance transfer or complaints about the
remittance transfer provider. This amendment will help ensure that
senders are more clearly informed about whom it could be more efficient
to contact first in each situation.
Related to this proposed amendment, the CFPB also proposes amending
model forms A-30(a)-(d), A-31, A-32, A-33, A-34, A-35, A-38, A-39, and
A-40 to make remittance transfer provider contact information more
prominent and easier to locate by consumers. The proposed amendments
update the remittance transfer provider contact information in the
header of the model forms by adding the remittance transfer provider
phone number and website. The proposed amendments also update the model
forms for receipts and combined disclosures--A-31, A-32, A-34, A-35, A-
39, and A-40--adding a footer with the remittance transfer provider
name, phone number, website, and address. By making the contact
information easier to locate, the CFPB aims to prevent consumers from
confusing the State licensing agency and the CFPB contact information
with the remittance transfer provider's contact information. In
addition, the CFPB proposes other minor amendments to formatting or to
promote consistency in model forms A-30(a)-(d), A-31, A-32, A-33, A-34,
A-35, A-37, A-38, A-39, and A-40, as well as two corrections of
spelling errors on Spanish language model forms A-39 and A-40, as
discussed below.
I. Summary of the Proposed Rule
The CFPB is proposing to amend subpart B of Regulation E, at
section 1005.31(b)(2)(vi),\15\ to require that applicable disclosures,
including the receipt and combined disclosure, inform senders of
remittance transfers that they can contact the State licensing agency
of the remittance transfer provider and the CFPB with unresolved
problems with the transfer or complaints about the remittance transfer
provider, instead of the current statement that informs senders that
they can contact such agencies with questions or complaints.
Additionally, the CFPB proposes conforming changes to this statement on
model forms A-31, A-32, A-34, A-35, A-37, A-39, and A-40 provided in
appendix A to Regulation E. The CFPB has tested model disclosures with
this language. The CFPB seeks comment on whether the proposed changes
will provide helpful information to senders and what, if any, impact
these proposed changes may have on consumers, remittance transfer
providers, and State licensing agencies. This proposed rule is limited
to the narrow issue of amending the required language relating to
senders contacting the State licensing agency and the CFPB, with a
related minor change to certain model forms to make a remittance
transfer provider's contact information easier to locate, and a few
minor changes to certain model forms for formatting and consistency.
Comments relating to other topics relevant to remittance transfers,
Regulation E, the EFTA, or any other topic are outside the scope of
this proposed rulemaking.
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\15\ 12 CFR 1005.31(b)(2)(vi).
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In addition to the model form changes that correspond to changes in
Regulation E, the CFPB also proposes the minor change to A-30(a)-(d),
A-31, A-32, A-33, A-34, A-35, A-37, A-38, A-39, and A-40 to make a
remittance transfer provider's contact information easier to locate.
Specifically, the CFPB proposes updating the model form header to
include phone number and website. Additionally, for the receipt and
combined disclosure model forms--A-31, A-32, A-34, A-35, A-39, and A-
40--the CFPB proposes adding a footer with the remittance transfer
provider's contact information, including name, phone number, website,
and address, to make the contact information easier to locate for
consumers in these disclosures.
The CFPB also proposes the formatting amendments and other
amendments that promote consistency across model forms A-30(a)-(d), A-
31, A-32, A-33, A-34, A-35, A-37, A-38, A-39, and A-40. This includes
updating the year in ``Today's Date'' and ``Date Available'' to
``2024'' across model forms to A-30(a)-(d), A-31, A-32, A-33, A-34, A-
35, A-38, A-39, and A-40. This also includes updating the formatting,
which includes spacing and alignment, and font to make them consistent
across model forms A-30(a)-(d), A-31, A-32, A-33, A-34, A-35, A-37, A-
38, A-39, and A-40. Additionally, the CFPB proposes updates to model
forms A-39 and A-40 to correct the Spanish language words
``transaccion'' and ``Mexico'' to include an appropriate accent and
read ``transacci[oacute]n'' and ``M[eacute]xico,'' respectively.
II. Consumer Testing
To help ensure that the proposed change to the statement required
by Sec. 1005.31(b)(2)(vi) would aid in consumer understanding, the
CFPB conducted user testing, which included open-ended questions and
usability testing \16\ of the proposed revised statement on English-
language model disclosures, with consumers.\17\ During testing,
consumers were presented with different iterations of these model
disclosures, including the proposed updated statement language. The
CFPB
[[Page 79458]]
directly observed how consumers would use these updated model
disclosures while consumers explained the thought process behind their
decisions. The CFPB used open-ended questions to understand consumers'
prior history with remittance transfers, actions taken when issues
arose with a remittance transfer, and how the updated model disclosure
would change their course of action. The CFPB's approach to user
testing supported opportunities for additional probing with non-
standard follow-up questions to more deeply understand where consumers
would look for information on the model disclosure, how they might
interpret the language, and what parts of the model disclosure might be
confusing and improved over the course of testing. Broadly, this
technique helped the CFPB to understand if the model disclosure was
meeting consumer needs and to respond quickly with revisions based on
feedback.
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\16\ See 5 CFR 1320.3(h)(3).
\17\ More specifically, the CFPB conducted user testing on
English-language model disclosures. The CFPB conducted user testing
with nine consumers. As described below, testing involved only open-
ended questions and direct observation of how consumers interacted
with, understood, and found information on the model disclosure.
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User testing participants included a mix of people who had some
experience with remittance transfers and people who did not have such
experience but planned to send money abroad in the next year.
Participants were presented with a hypothetical scenario of having a
problem with a remittance transfer and needing to find steps to get it
resolved using the model disclosure. Participants were also asked about
the clarity of information on the proposed updated model disclosure and
their understanding of the content.
All participants interacting with the model disclosure in the
testing described above indicated that they would contact the
remittance transfer provider first with any questions or concerns about
the remittance transfer. The participants also all indicated that they
found the disclosures clear, including about whom they could contact if
they had questions or concerns.
III. Legal Authority
Section 1073 of the Dodd-Frank Act created a new section 919 of the
EFTA and requires remittance transfer providers to provide disclosures
to senders of remittance transfers, pursuant to rules prescribed by the
CFPB.\18\ In addition to the statutory mandates set forth in the Dodd-
Frank Act, EFTA section 904(a) authorizes the CFPB 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). The
model forms in appendix A were adopted pursuant to EFTA section
904(a).\19\
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\18\ See 77 FR 6194 at 6204.
\19\ See id.
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EFTA section 919(a)(2)(A) and (B) require a remittance transfer
provider to provide to a sender a written pre-payment disclosure with
certain information, as well as a written receipt that includes the
information provided on the prepayment 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.\20\ EFTA section 919(a)(5)(C) also authorizes the
CFPB to permit a remittance transfer provider to provide a single
written disclosure to a sender, instead of a prepayment disclosure and
receipt, that accurately discloses all of the information required on
both the prepayment disclosure and the receipt. Section 1005.31(b)(1)
and (2) provide these substantive disclosure requirements for pre-
payment disclosures and receipts, respectively.\21\ Section
1005.31(b)(2)(vi) provides for disclosure of a statement that the
sender can contact the State agency that regulates the remittance
transfer provider and the CFPB 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.\22\ The CFPB also
authorized remittance transfer providers to use a combined disclosure,
in lieu of the prepayment disclosure and receipt, subject to the
requirements in Sec. 1005.31(b)(3).\23\
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\20\ See 77 FR 6194 at 6218.
\21\ See id. Additional disclosure requirements for subsequent
transfers in a series of preauthorized remittance transfers are
codified in section 1005.36(d)(1). See 12 CFR 1005.31(d)(1).
\22\ See 77 FR 6194 at 6228-29.
\23\ See 77 FR 6194 at 6228, 6229-30.
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IV. Effective Date
The CFPB proposes that the final rule, if adopted, would take
effect 60 days after publication in the Federal Register with respect
to new disclosures made on or after that date. Remittance transfer
providers would not be required to send updated disclosures with
respect to disclosures made before that date. The CFPB solicits
comments on whether the CFPB should provide a mandatory compliance date
that is after the effective date of the proposed changes. Do remittance
transfer providers need additional time after the effective date to
implement the required changes to their disclosures, including to
translate the new statement into new languages? Are there any other
steps that will be required to implement the change, and if so, how
much time is needed to take those steps?
V. CFPA Section 1022(b) Analysis
A. Overview
In developing this proposed rule, the CFPB has considered the
proposed rule's potential benefits, costs, and impacts per section
1022(b)(2)(A) of the Consumer Financial Protection Act of 2010 (CFPA).
The CFPB requests comment on the preliminary analysis presented below
and submissions of more data that could inform the CFPB's analysis of
the potential benefits, costs, and impacts. In developing the proposed
rule, the CFPB has consulted or offered to consult with the appropriate
prudential regulators and other Federal agencies, including about the
consistency of this proposed rule with any prudential, market, or
systemic objectives administered by those agencies, in accordance with
section 1022(b)(2)(B) of the CFPA.
B. Goals
The goal of this proposed rule is to modify how consumers are
informed that they can contact a State licensing agency and the CFPB
about their remittance transfer. The new language proposed in this rule
intends to ensure consumers are informed about the entity they can
contact with questions about their remittance transfer, particularly
when the remittance transfer provider would be best suited to answer
their question or concern, rather than the State licensing agency or
the CFPB. The proposed rule also updates model forms to make remittance
transfer provider contact information more prominent and easier to
locate by consumers.
C. Data Limitations and Quantification of Benefits, Costs, and Impacts
The discussion below relies on information the CFPB has obtained
from industry, other regulatory agencies, and publicly available
sources. These sources form the basis for the CFPB's consideration of
the likely impacts of the proposed rule. The CFPB provides estimates,
to the extent possible, of the potential benefits and costs to
consumers and covered persons of this proposal given available data.
The specific data sources that inform this discussion include
public Federal Financial Institutions Examination Council (FFIEC) and
National Credit Union Association (NCUA) call report
[[Page 79459]]
data, annual reports produced by the Conference of State Bank
Supervisors (CSBS) using Nationwide Multistate Licensing System (NMLS)
data, research published by the World Bank, internal data from the
CFPB's Office of Consumer Response, and previous CFPB rulemaking
experience with regards to remittance transfers.
Several important data limitations impact the CFPB's determination
of the proposed rule's benefits, costs, and impacts. Most importantly,
the CFPB lacks specific information on exact amount of employee time
that remittance transfer providers will have to expend to update
disclosure statement with the language proposed in this rule. In
addition, data on money transmitters are typically limited to national
aggregates, which impacts the ability of the CFPB to examine money
transmitters in more detail. There are also limited consumer or
transaction-level data available on remittance transfers, which impact
some analysis where the CFPB would ideally examine remittance transfer
consumers by subgroups.
While CFPB acknowledges these data limitations, the analysis below
provides quantitative estimates where possible and a qualitative
discussion of the proposed rule's benefits, costs, and impacts. General
economic principles and the CFPB's expertise, together with the
available data, provide insight into these benefits, costs, and
impacts. The CFPB requests additional data or studies that could help
quantify the benefits and costs to consumers and covered persons of the
proposed rule.
D. Baseline for Analysis
To evaluate the proposal's benefits, costs, and impacts, the CFPB
measures the proposal's benefits, costs, and impacts against a baseline
in which the CFPB would take no action. This baseline assumes that, in
the absence of the proposed change to the statement, remittance
transfer providers would continue complying with the disclosure
requirements as codified in subpart B to Regulation E, at section
1005.31(b)(2).\24\ This means that providers would continue using the
statement that the sender should contact the State licensing agency and
the CFPB with questions or complaints about the remittance transfer
provider. The baseline also assumes that all other requirements under
Regulation E remain unchanged.
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\24\ 12 CFR 1005.31(b)(2).
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E. Potential Benefits and Costs to Consumers and Covered Persons
1. Potential Benefits and Costs to Covered Persons
The relevant covered persons for the purposes of this proposed rule
are remittance transfer providers as defined in the Remittance Rule.
The Rule provides that the term ``remittance transfer 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 consumer. The Rule also provides that a person is
deemed not to be providing remittance transfers for a consumer in the
normal course of its business if the person has provided 500 or fewer
transfers in the current and previous calendar years.
Providers covered by the rule would be required to change the
statement on relevant remittance transfer disclosures.
Data on depository institutions and the number of remittance
transfers they provide are available from two sources. The first is the
FFIEC Reports of Condition and Income, otherwise referred to as Call
Reports. These data contain institution-level data on assets, the
number of remittance transfers, and the value of remittance transfers
for most FDIC insured institutions. Similarly, the NCUA collects Call
Reports from NCUA-insured institutions, which contain data on assets
and the number of remittance transfers.
According to FFIEC Call Reports, there were 4,587 banks as of Q4
2023.\25\ Of these, 316 made over 500 remittance transfers in 2023 and
would therefore not qualify for a safe harbor, and the CFPB assumes
would be required to comply with the change in disclosure statement of
the proposed rule. Similarly, as of Q4 2023, 167 of 4,702 credit unions
made over 500 remittance transfers.\26\ Therefore, of the 9,280
depository institutions, we expect that 483 will be covered by the
proposed rule and will need to change the statement on relevant
disclosures.
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\25\ See Fed. Fin. Insts. Examination Council, Central Data
Repository's Public Data Distribution, https://cdr.ffiec.gov/public/ManageFacsimiles.aspx (last visited Mar. 26, 2024).
\26\ See National Credit Union Administration, Credit Union and
Corporate Call Report Data, https://ncua.gov/analysis/credit-union-corporate-call-report-data/quarterly-data (last visited Mar. 26,
2024).
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As of the end of 2022, 34 States, the District of Columbia, and
Puerto Rico required their licensed companies to file an MSB Call
report to NMLS with financial data from MSB companies. The CSBS
released a report on MSB Call Report data as of the end of 2022,
including select information on money transmitters, the primary form of
non-depository financial institution that would provide remittance
transfers.\27\ This report provides the best data available to measure
the number of MSBs that might incur costs under this proposed rule.
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\27\ See Nationwide Licensing System, 2022 NMLS Money Services
Businesses Report, https://mortgage.nationwidelicensingsystem.org/about/Reports/2022%20MSB%20Annual%20Report.pdf.
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As of the end of 2022, there were 612 licensed money transmitters
reporting in NMLS. Of these, 359 reported money transmissions on their
NMLS call reports. The CFPB assumes that these 359 money transmitters
that are reporting money transmission would therefore incur the cost of
updating disclosures with the new language of this proposed rule.
Additionally, there were 482,050 active authorized agent relationships,
where the agent is authorized to conduct financial services on behalf
of the money transmitter. However, the CFPB believes that the vast
majority of the cost of compliance with updating the disclosure
statement will fall on money transmitter companies rather than their
agents. The CFPB believes that large money transmitters are likely to
facilitate compliance for their agents, achieve substantial benefits to
scale, and widely leverage the systems and software investments
required for compliance across a large base of agent locations.
Therefore, the CFPB assumes the cost of compliance with the proposed
rule will be negligible for money transmitter agents. The CFPB requests
comment on this assumption about compliance costs for money transmitter
agents.
The main costs for covered remittance transfer providers will be
the direct cost required to change the statement made in future
disclosures. Remittance transfer providers that are required to provide
disclosures in a foreign language would also need to translate the
statement into the appropriate foreign language.\28\ (The CFPB
understands that these disclosures are generally not pre-printed, as
they contain transaction-specific information, and the CFPB is not
proposing to require remittance transfer providers to send updated
disclosures with respect to disclosures made before the rule's
effective date.) The CFPB expects that this cost will primarily be
[[Page 79460]]
the employee time required to perform the changes and will be incurred
once. The extent of the change is relatively small relative to the
overall disclosure requirements, but it is possible that a remittance
transfer provider might have to make the change across multiple
delivery systems. This could include print receipts or forms, email
templates, text message templates, internet or phone applications, or
some combination thereof.
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\28\ The Remittance Rule's foreign language requirements for
disclosures are set forth in 12 CFR 1005.31(g). Accordingly,
providers that provide written disclosures in foreign languages will
need to translate the statement.
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The CFPB lacks sufficient data to specifically estimate the exact
cost of updating existing disclosures to comply with the proposed
statement. Specific cost data from covered institutions is not
generally available. In addition, data collected for the CFPB's
previous Regulation E rulemaking efforts concerned the cost of
transitioning to a new set of required disclosures, which would not be
appropriate for estimating cost for this proposed rule relative to the
baseline. Based on the procedures required to update the disclosures
and the fact that it might be required to be done across multiple types
of platforms, the CFPB assumes that covered institutions would incur a
one-time cost of eight hours of employee time per institution.
Therefore, the CFPB expects that the total of 842 covered entities will
each incur the one-time cost of eight hours of employee time. This
means 6,736 hours total of estimated one-time cost.
The CFPB estimates that this cost is relatively small compared to a
remittance transfer provider's revenue from remittance transfers. Banks
report the total value and number of remittance transfers on Call
Reports. The average dollar value per transfer was $6,631. A similar
figure cannot be calculated from NCUA call reports, but the CFPB
assumes credit unions would have a similar dollar value per transfer.
According to the CSBS 2022 annual report, the average transmission
amount for a foreign transaction was $566 for non-depository money
transmitters. According to data made by the World Bank Group, the
average cost for a consumer to send a remittance transfer from the
United States was 11.48 percent of the remittance transfer value for
depository institutions and 5.33 percent for non-depositories.\29\ For
depositories, this means that the average (gross) revenue per transfer
was about $761 for depositories and $30 for non-depository money
transmitters. The average hourly earnings for a private, non-farm
employee in the financial activities industry in December 2023 was
$44.51.\30\ Therefore, the CFPB expects the one-time cost to be less
than the revenue from one transfer for depositories and less than the
revenue from twelve transfers for non-depository money transmitters.
This cost would be borne only once and the CFPB does not expect any
cost from this proposed rule to be incurred in years after the
implementation.
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\29\ See Figure 14, The World Bank Group, Remittance Prices
Worldwide Quarterly: An Analysis of Trends in Cost of Remittance
Services, https://remittanceprices.worldbank.org/sites/default/files/rpw_main_report_and_annex_q323_1101.pdf.
\30\ See U.S. Bureau of Labor Statistics, Table B-3. Average
hourly and weekly earnings of all employees on private nonfarm
payrolls by industry sector, seasonally adjusted, https://www.bls.gov/news.release/empsit.t19.htm.
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The CFPB requests comment on the above analysis of the costs of
updating remittance transfer disclosures.
2. Potential Benefits and Costs to Consumers
There is an opportunity cost for consumers who contact their State
licensing agency or the CFPB with questions or concerns about their
remittance transfer that would have been better directed to remittance
transfer providers. The time spent contacting these agencies could have
been instead spent contacting the provider to resolve their concern or
otherwise spent on valuable activity. In this way, the CFPB views the
time saved by the consumer as a benefit of the proposed change in the
disclosure statement.
As described above in section I, the CFPB's Office of Consumer
Response estimates that the CFPB receives approximately 1,800 calls per
month with questions related to remittance transfers that it is not
best placed to answer. For these calls, the average call time is
between 7 and 10 minutes. Using 8.5 minutes (the midpoint of 7 and 10)
and 1,800 calls per month, the CFPB estimates the total time spent per
year is equivalent to 183,600 minutes, or 3,060 hours where consumers
call the CFPB's toll-free number seeking answers that the CFPB is not
able to provide. Therefore, we estimate that the proposed amendment to
Regulation E will save consumers about 3,060 hours, annually.
It is possible that the proposed new disclosure statement does not
prevent all consumers from contacting the CFPB or State license
agencies with such calls. In this case, the annual benefit described
above would be an overestimate, as 3,060 hours annually would be the
effect if all calls were redirected to the source best placed to answer
questions or concerns. The consumer testing of section III suggests
that the new language will be effective at reducing consumers calling
an agency first when the remittance transfer provider might be better
to call first, but the full extent of the proposed language's effect on
consumer behavior carries a degree of uncertainty. However, there is
another sense in which the CFPB's estimate could be an underestimate.
The CFPB lacks similar data on call volume and duration from State
licensing agencies to whom consumers are also potentially directing
questions that would be better posed to remittance transfer providers.
If a significant amount of consumer time is spent contacting State
agencies in a similar manner, then the above estimate could understate
the potential benefits of the proposed rule, as it is only based on
CFPB call data.
In addition to the opportunity cost of their time, the proposed
rule may also save some consumers the frustration and stress caused by
placing calls to agencies that are not best placed to answer their
questions. Some consumers may be seeking assistance during a time of
financial distress, in which timely assistance is important. The CFPB
lacks sufficient data to quantify this benefit.
The CFPB does not expect consumers to directly bear any costs
associated with the proposed rule. As noted above, the proposal would
impose limited costs on remittance transfer providers. Firms are
unlikely to raise prices as a consequence, given the minimal size of
the cost increase. The CFPB requests comment on the above analysis of
the benefits of updating remittance transfer disclosures.
3. Distribution of Consumer Impacts
The CFPB lacks specific data on remittance transfer senders to
fully describe the potential distribution of consumer benefits.
However, previous research has shown that remittance senders are much
more likely to be recent immigrants.\31\ The top three destinations for
remittance transfers sent from the United States in 2021 were Mexico,
India, and Guatemala.\32\
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\31\ See Elizabeth Grieco, Patricia de la Cruz, Rachel Cortes &
Luke Larsen, 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 Working Paper
No. 87, https://www.census.gov/content/dam/Census/library/working-papers/2010/demo/POP-twps0087.pdf.
\32\ KNOMAD, World Bank Bilateral Remittance Matrix 2021 (Dec.
2022), https://www.knomad.org/data/remittances.
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[[Page 79461]]
F. Potential Specific Impacts of the Proposed Rule on Depository
Institutions and Credit Unions With $10 Billion or Less in Total Assets
According to the Q4 2023 FFIEC Call Report, there are 4,429 banks
with $10 billion or less in total assets. Of these 4,429 banks, 201
made over 500 remittance transfers in 2023. According to the Q4 2023
NCUA Call Report, there are 4,681 credit unions with $10 billion or
less in total assets. Of these 4,681 institutions, 148 made over 500
remittance transfers in 2023. Therefore, of the 9,110 total depository
institutions (banks + credit unions) with $10 billion or less in
assets, we expect that 349 will be required to make changes to existing
disclosures under this proposed rule. As described above, the CFPB
expects each of these institutions to spend eight hours of employee
time to update existing disclosures and that this will occur once.
G. Potential Specific Impacts of the Proposed Rule on Consumer Access
to Credit and on Consumers in Rural Areas
The CFPB does not expect the proposed rule regarding remittance
transfer disclosures to have any effect on consumers' access to credit.
The CFPB is unaware of data on remittance transfer senders that
would provide detail sufficient to estimate a specific effect of the
proposed rule on consumers in rural areas. However, the CFPB does
expect that consumers from rural areas who have questions about their
remittance transfer will benefit from clarity as to which entity would
be best positioned to address their concerns. The CFPB requests comment
on potential impacts of the proposed rule on consumers in rural areas.
VI. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (RFA) generally requires an agency
to conduct an initial regulatory flexibility analysis (IRFA) and a
final regulatory flexibility analysis of any rule subject to notice-
and-comment rulemaking requirements unless the agency certifies that
the rule will not have a significant economic impact on a substantial
number of small entities (SISNOSE). The CFPB is also subject to
specific additional procedures under the RFA involving convening a
panel to consult with small business representatives before proposing a
rule for which an IRFA is required. An IRFA is not required for this
proposal because the proposal, if adopted, would not have a SISNOSE.
Small institutions, for the purposes of the Small Business
Regulatory Enforcement Fairness Act (SBREFA) of 1996, are defined by
the Small Business Administration. Effective March 17, 2023, financial
institutions with less than $850 million in total assets are determined
to be small. For non-depository money transmitters, the standard is $47
million in receipts.\33\
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\33\ Based on the size-standards for ``financial transactions
processing, reserve, and clearinghouse activities'' (NAICS code
522320). See U.S. Small Business Administration, Table of Small
Business Size Standards https://www.sba.gov/document/support-table-size-standards.
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According to the Q4 2023 FFIEC Call Report, there are 3,422 banks
with $850 million or less in assets. Of the 3,422 banks, 1,237 made any
remittance transfers and only 39 made over 500 remittance transfers in
2023. According to the Q4 2023 NCUA Call Report, there are 4,201 credit
unions with $850 million or less in assets. Of the 4,201 institutions,
1,208 made any remittance transfers and only 27 made over 500
remittance transfers in 2023. Therefore, of the 7,623 small depository
institutions (banks and credit unions), we expect that 66 are both
small and process enough remittance transfers such that they would be
required to make changes to existing disclosures under the proposed
rule.
The CFPB is unaware of data concerning receipts for money
transmitters, specifically, but data from the 2017 Statistics of U.S.
Businesses does provide the distribution of firms by receipts in the
broader industry to which money transmitters would belong. Of all firms
within the ``Financial Transactions Processing, Reserve, and
Clearinghouse Activities'' industry, 95 percent would have receipts
under $50 million.\34\ It is reasonable to assume that a similar
proportion of money transmitters would be classified as small according
to the value of their receipts. Of the 359 money transmitters in 2022
who documented any remittance transfer, we would expect around 341 to
be considered small according to the SBA definition. The CFPB is
unaware of similar data on agents, specifically, but believes that the
vast majority would likely be considered small. However, as stated in
section VI.E.1 above, the CFPB expects the cost of the updated
disclosure statement to fall primarily on money transmitters and there
to be a negligible effect on agents.
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\34\ U.S. Census Bureau, 2017 SUSB Annual Data Tables by
Establishment Industry, Data by Enterprise Receipts Size, https://www.census.gov/data/tables/2017/econ/susb/2017-susb-annual.html.
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Based on these statistics and the cost estimates in section VI.E,
the CFPB does not expect the proposed rule to have a significant effect
on a substantial number of small entities. The total of 407 small
entities that the CFPB expects to be impacted by the proposed rule is
14.5 percent of the number of small entities that perform any
remittance transfers (1,237 banks, 1,571 credit unions, and 359 money
transmitters). In addition, the cost of employee time to change
remittance transfer disclosures is likely a small fraction of annual
remittance transfer income for an institution and should only be
incurred once.
Accordingly, the Director hereby certifies that this proposal, if
adopted, would not have a significant economic impact on a substantial
number of small entities. Thus, neither an IRFA nor a small business
review panel is required for this proposal. The CFPB requests comment
on the analysis above.
VII. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA), Federal agencies
are generally required to seek approval from the Office of Management
and Budget (OMB) for information collection requirements prior to
implementation. Under the PRA, the CFPB may not conduct or sponsor,
and, notwithstanding any other provision of law, a person is not
required to respond to, an information collection unless the
information collection displays a valid control number assigned by OMB.
As explained below, the CFPB has determined that this proposed rule
does not contain any new or substantively revised information
collection requirements other than those previously approved by OMB
under that OMB control number. The proposed rule would amend 12 CFR
part 1005 (Regulation E), which implements EFTA. The CFPB's OMB control
number for Regulation E is 3170-0014.
The CFPB does not believe that this proposed rule would impose any
new or substantively revised collections of information as defined by
the PRA. The proposed rule would only require changes to the
disclosures already required to be provided by remittance transfer
providers. The CFPB welcomes comments on these determinations or other
burden-related aspects of the proposal such at the burden of the
information collections, their utility, or whether they substantially
duplicate existing information collection requirements of other
agencies. Comments should be submitted as outlined in the ADDRESSES
section above. All comments will become a matter of public record.
[[Page 79462]]
List of Subjects in 12 CFR Part 1005
Automated teller machines, Banks, banking, Consumer protection,
Credit unions, Electronic fund transfers, National banks, Remittance
transfers, Reporting and recordkeeping requirements, Savings
associations.
Authority and Issuance
For the reasons set forth above, the CFPB proposes to amend 12 CFR
part 1005 as set forth below:
PART 1005--ELECTRONIC FUND TRANSFERS (REGULATION E)
0
1. The authority citation for part 1005 continues to read as follows:
Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 1693b. Subpart B is
also issued under 12 U.S.C. 5601 and 15 U.S.C. 1693o-1.
Subpart B--Requirements for Remittance Transfers
0
2. Section 1005.31 is amended by revising paragraph (b)(2)(vi) to read
as follows:
Sec. 1005.31 Disclosures
* * * * *
(b) * * *
(2) * * *
(vi) A statement that the sender can contact the State agency that
licenses or charters the remittance transfer provider with respect to
the remittance transfer and the Consumer Financial Protection Bureau if
the sender has unresolved problems with respect to the remittance
transfer 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. The disclosure must provide the name,
telephone number(s), and website of the State agency that licenses or
charters the remittance transfer provider with respect to the
remittance transfer and the name, toll-free telephone number(s), and
website of the Consumer Financial Protection Bureau; and
* * * * *
0
3. Amend Appendix A to part 1005 by:
0
a. Adding titles A-33 and A-38 in numerical order to the table of
contents of the appendix; and
0
b. Revising model forms A-30(a) through (d), A-31, A-32, A-33, A-34, A-
35, A-37, A-38, A-39, and A-40.
The revisions and additions to read as follows:
Appendix A to Part 1005--Model Disclosure Clauses and Forms
* * * * *
A-33--Model Form for Pre-Payment Disclosures for Dollar-to-Dollar
Remittance Transfers (Sec. 1005.31(b)(1))
* * * * *
A-38--Model Form for Pre-Payment Disclosures for Remittance Transfers
Exchanged Into Local Currency--Spanish (Sec. 1005.31(b)(1))
* * * * *
BILLING CODE 4810-AM-P
A-30(a)--Model Form for Pre-Payment Disclosures for Remittance
Transfers Exchanged Into Local Currency (Sec. 1005.31(b)(1))
[GRAPHIC] [TIFF OMITTED] TP30SE24.003
[[Page 79463]]
A-30(b)--Model Form for Pre-Payment Disclosures for Remittance
Transfers Exchanged Into Local Currency (Sec. 1005.31(b)(1))
[GRAPHIC] [TIFF OMITTED] TP30SE24.004
A-30(c)--Model Form for Pre-Payment Disclosures for Remittance
Transfers Exchanged Into Local Currency (Sec. 1005.31(b)(1))
[[Page 79464]]
[GRAPHIC] [TIFF OMITTED] TP30SE24.005
A-30(d)--Model Form for Pre-Payment Disclosures for Remittance
Transfers Exchanged Into Local Currency (Sec. 1005.31(b)(1))
[[Page 79465]]
[GRAPHIC] [TIFF OMITTED] TP30SE24.006
A-31--Model Form for Receipts for Remittance Transfers Exchanged Into
Local Currency (Sec. 1005.31(b)(2))
[[Page 79466]]
[GRAPHIC] [TIFF OMITTED] TP30SE24.007
A-32--Model Form for Combined Disclosures for Remittance Transfers
Exchanged Into Local Currency (Sec. 1005.31(b)(3))
[[Page 79467]]
[GRAPHIC] [TIFF OMITTED] TP30SE24.008
A-33--Model Form for Pre-Payment Disclosures for Dollar-to-Dollar
Remittance Transfers (Sec. 1005.31(b)(1))
[[Page 79468]]
[GRAPHIC] [TIFF OMITTED] TP30SE24.009
A-34--Model Form for Receipts for Dollar-to-Dollar Remittance Transfers
(Sec. 1005.31(b)(2))
[[Page 79469]]
[GRAPHIC] [TIFF OMITTED] TP30SE24.010
A-35--Model Form for Combined Disclosures for Dollar-to-Dollar
Remittance Transfers (Sec. 1005.31(b)(3))
[[Page 79470]]
[GRAPHIC] [TIFF OMITTED] TP30SE24.011
* * * * *
BILLING CODE 4810-AM-C
A-37--Model Form for Error Resolution and Cancellation Disclosures
(Short) (Sec. 1005.31(b)(2)(iv) and (b)(2)(vi))
You have a right to dispute errors in your transaction. If you
think there is an error, contact us within 180 days at [insert
telephone number] or [insert website]. You can also contact us for a
written explanation of your rights.
You can cancel for a full refund within 30 minutes of payment,
unless the funds have been picked up or deposited.
If you have unresolved problems with your money transfer or
complaints about [insert name of remittance transfer provider],
contact:
State Regulatory Agency, 800-111-2222,
www.stateregulatoryagency.gov.
Consumer Financial Protection Bureau, 855-411-2372, 855-729-2372
(TTY/TDD), www.consumerfinance.gov.
BILLING CODE 4810-AM-P
A-38--Model Form for Pre-Payment Disclosures for Remittance Transfers
Exchanged Into Local Currency--Spanish (Sec. 1005.31(b)(1))
[[Page 79471]]
[GRAPHIC] [TIFF OMITTED] TP30SE24.012
A-39--Model Form for Receipts for Remittance Transfers Exchanged Into
Local Currency--Spanish (Sec. 1005.31(b)(2))
[[Page 79472]]
[GRAPHIC] [TIFF OMITTED] TP30SE24.013
A-40--Model Form for Combined Disclosures for Remittance Transfers
Exchanged Into Local Currency--Spanish (Sec. 1005.31(b)(3))
[[Page 79473]]
[GRAPHIC] [TIFF OMITTED] TP30SE24.014
[[Page 79474]]
* * * * *
Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2024-22004 Filed 9-27-24; 8:45 am]
BILLING CODE 4810-AM-C