The Consumer Financial Protection Bureau (CFPB) has slapped UK-based remittance company Wise with a $2 million fine for engaging in a series of illegal actions, including advertising inaccurate fees and failing to properly disclose exchange rates and other costs.

According to the CFPB, Wise misled customers in the United States about its ATM fees and failed to properly disclose other fees. The agency also alleges that when people sent money that did not arrive on time, Wise failed to refund the remittance fees in the timeframe required by law. This led to "hundreds of thousands of dollars" in harm to consumers, charged the CFPB.

The CFPB has ordered Wise to pay approximately $450,000 in redress to harmed consumers and a $2.025 million civil money penalty. The agency's director, Rohit Chopra, stated that "by deceiving customers, Wise gave itself an unfair advantage over other competitors in the remittances market."

Wise, which does business in the US through its wholly owned subsidiary Wise US, recently announced an expansion into Mexico. In response to the CFPB's allegations, a Wise spokesperson claimed that the agency had conducted a "routine examination" of Wise US Inc. for compliance with various US laws pertaining to financial providers between June 2020 and May 2021.

The CFPB highlighted certain issues where Wise claims it had "inadvertently been operating in ways the Bureau deemed necessary to address." Wise said that it "proactively and voluntarily compensated in full" the affected customers a total of $450,000 and "cooperated fully with the CFPB and immediately worked to address all identified issues," with the majority resolved by November 2022.

The company stated that it reached an agreement with the Bureau on January 30, adding that "at Wise, we continuously invest in our compliance program and processes to ensure we maintain a robust framework, including in the US, where we have strengthened our teams and built substantial tooling."

This is not the first instance of fintech companies being fined for deceptive practices. Recently, Block, the parent company of Cash App, agreed to pay an $80 million fine as part of a settlement related to violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) regulations.

The CFPB's action against Wise serves as a reminder to fintech companies to prioritize transparency and compliance in their operations. As the fintech industry continues to grow and evolve, regulatory bodies will likely remain vigilant in ensuring that companies adhere to existing laws and regulations.

In the wake of this fine, Wise and other fintech companies would do well to re-examine their practices and ensure that they are providing accurate and clear information to their customers. By doing so, they can avoid similar regulatory actions and maintain the trust of their customers.