On June 13, Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York entered a stipulated final judgement resolving claims brought by the New York Attorney General against a global money transmitter. The lawsuit, initially filed in partnership with the CFPB (previously discussed here), alleged violations of the Electronic Fund Transfer Act (EFTA), including the Remittance Rule under Regulation E, as well as the Consumer Financial Protection Act (CFPA).
The court’s order follows the CFPB’s recent withdrawal from the case in April (previously discussed here), after which the New York AG continued pursuing claims under New York state law. The original complaint filed jointly by the Bureau and the New York Attorney General alleged the following:
- Inaccurate availability disclosures. The company allegedly failed to accurately disclose the date on which funds would be available to recipients, contrary to the requirements of the Remittance Rule.
- Deficient error resolution. The company purportedly failed to promptly investigate consumer complaints, issue required fee refunds, or provide mandated explanations and documentation within the regulatory timeframes.
- Noncompliant internal procedures. Regulators alleged the company lacked adequate written policies to identify covered errors, ensure timely investigations, and retain necessary compliance documentation.
- Unfair acts and practices. The company was accused of unnecessarily delaying remittance transfers and refunds after completing internal screenings, depriving consumers of timely access to funds.
The stipulated final judgement requires the company to improve its compliance-management systems, enhance employee training, and ensure that its disclosures and error-resolution procedures align with federal law. The company must also provide compliance documentation to the New York Attorney General upon request for a three-year period.
Putting It Into Practice: The final judgement reflects how state regulators are taking the lead in consumer protection as the CFPB scales back its involvement in legacy enforcement actions (previously discussed here and here). While federal enforcement activity may be narrowing, state regulators like the New York AG continue to be active and aggressive.