FinTech News
Wise Becomes Latest FinTech Fined By CFPB
The Consumer Financial Protection Bureau (CFPB) has ordered the FinTech remittance app Wise to pay nearly $2.5 million due to allegedly misleading customers about fees.
About the order:
Last week, the CFPB announced that Wise would pay more than $2 million after the agency found that the service had advertised inaccurate fees and failed to disclose other expenses. This total includes approximately $450,000 in redress that will be funneled to impacted customers. The CFPB says that there are at least 16,000 customers who were overcharged as a result of Wise’s actions. Additionally, the company will pay $2.025 million in penalties to the CFPB’s victims relief fund.
According to the CFPB’s press release, Wise sent emails to customers in the United States advertising perks and lowered fees that didn’t apply to them. For example, the agency says some users were led to believe that they’d be entitled to two free withdrawals for around $200 each when, in reality, U.S. customers were capped at $100 each. The bureau also accuses Wise of not disclosing accurate fees to customers who funded their accounts using a credit card via a mobile wallet. Wise is also said to have failed to refund users when funds were not available in the timetable they were promised.
Other CFPB developments:
This action against Wise is the latest in a series of fines and other crackdowns the CFPB has engaged in. Last month, the bureau announced it was suing Capital One due to an interest rate discrepancy between two of its accounts. Last year, the CFPB revealed a lawsuit against top banks in regard to fraud prevalent on the Zelle peer-to-peer payment service. Meanwhile, in October, Apple and Goldman Sachs agreed to pay a combined $89.8 million to the CFPB due to customer service issues and other alleged missteps with the Apple Card.
What they’re saying:
Commenting on the action against Wise, CFPB Director Rohit Chopra said, “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.”
My thoughts:
Although I’ve never used Wise personally, I have seen the name and logo plenty of times. I’ve also experienced firsthand how wires can get crossed when an app offers different features to customers in varying geographic markets. Therefore, I have some sympathy for Wise’s plight.
At the same time, though, the intricacies of running a FinTech operation across multiple counties are of little concern to users themselves. That’s why I think this action from the CFPB makes sense and will hopefully encourage other services to pay more attention in order to catch these sorts of issues before they cause damage. More importantly, I also hope that those customers who ended up paying for Wise’s mistakes are made whole with this resolution.
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