The Consumer Financial Protection Bureau (CFPB) has fined global fintech Wise $2m, just days after its launch in Mexico
The penalties stem from misleading advertising about fees, failure to disclose exchange rates properly, and other regulatory violations.
Rohit Chopra, Director of CFPB, commented: “By deceiving customers, Wise gave itself an unfair advantage over other competitors in the remittances market. New technology can help make money transfers cheaper and more convenient, but companies must be truthful and live up to longstanding law.”
The violations include multiple disclosure errors. Wise failed to provide accurate fee information to customers funding prepaid accounts via Apple Pay or Google Pay when using a credit card. It also did not properly disclose exchange rates, failed to refund fees when funds were unavailable to recipients on time, and neglected other required disclosures.
Additionally, Wise allegedly misled US customers about perks such as lower ATM fees and free withdrawals. Although Wise claimed 80% of customers would benefit from lower ATM fees, the CFPB found that this applied mainly to non-US users.
US customers were also led to believe they could make two free withdrawals of over $200 each when in reality, the limit was only $100 per withdrawal.
As a result, the CFPB has Wise to pay a $2m civil penalty.
Commenting to Payment Expert, Wise said: Wise: “Wise is a customer-first company and we are committed to providing the best customer experience possible. Between June 2020 and May 2021, the US CFPB conducted a routine examination of Wise US Inc. for compliance with various US laws pertaining to financial providers.
“In February 2022, the CFPB highlighted certain issues where Wise had inadvertently been operating in ways the Bureau deemed necessary to address. These were mainly technical issues such as having certain materials downloadable as PDFs, updating wording choices like ‘Amount We’ll Convert’ to ‘Transfer Amount’, displaying exchange rates rounded up to four decimal points instead of six decimal points (which was more accurate), and having full disclaimer text available in-page rather than through a hyperlink.
“In limited cases, some US customers saw slightly incorrect fees, which, upon receiving the findings in February 2022, Wise proactively and voluntarily compensated in full, totalling $450,000 across the affected customers. Wise cooperated fully with the CFPB and immediately worked to address all identified issues, with the majority resolved by November 2022.”
