CFPB Fines Fintech Wise for Deceptive Fees

CFPB Imposes $2 Million Fine on Wise for Alleged Misleading Practices

The Consumer Financial Protection Bureau (CFPB) has levied a penalty of approximately $2 million against Wise, a remittance company headquartered in the U.K., citing a pattern of what it characterizes as unlawful conduct.

Details of the Allegations

The CFPB asserts that these actions encompassed the advertisement of inaccurate fee structures and a failure to transparently reveal exchange rates and associated costs. Specifically, the agency contends that the fintech firm misrepresented ATM fee information to customers within the United States and did not adequately disclose other applicable charges.

Furthermore, the CFPB alleges that Wise failed to issue timely refunds of remittance fees when funds were not delivered as scheduled. This deficiency reportedly resulted in financial detriment totaling “hundreds of thousands of dollars” to consumers, according to the bureau.

Remedy and Penalties

As a result, the agency has mandated that Wise, a publicly traded entity, provide approximately $450,000 in restitution to affected consumers. In addition, a civil money penalty of $2.025 million has been imposed.

Rohit Chopra, Director of the CFPB, stated that Wise’s deceptive practices provided an unfair competitive advantage. He emphasized that while new technologies can streamline and reduce the cost of money transfers, companies must adhere to established legal standards and maintain transparency.

Wise US and Expansion Plans

Wise operates within the U.S. through its fully-owned subsidiary, Wise US. The company recently announced its expansion into the Mexican market.

Wise’s Response

A Wise spokesperson communicated to TechCrunch that the CFPB conducted a standard examination of Wise US Inc. between June 2020 and May 2021 to assess compliance with U.S. financial regulations.

Wise indicated that the CFPB identified certain areas in February 2022 where its operations had “inadvertently” deviated from the Bureau’s requirements.

The company confirmed that it “proactively and voluntarily” compensated affected customers with a total of $450,000. Wise also stated it “cooperated fully with the CFPB and immediately worked to address all identified issues,” with the majority being resolved by November 2022.

An agreement was reached with the Bureau on January 30th. Wise affirmed its ongoing investment in its compliance program and processes to ensure a robust framework, particularly within the U.S., where it has bolstered its teams and developed substantial tooling.

Broader Trend of Fintech Fines

This case represents the latest instance of fintech companies facing penalties for deceptive practices. Block, the parent company of Cash App, recently consented to an $80 million fine as part of a settlement concerning violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) regulations.