Electronic Fund Transfers (Regulation E), 6310-6334 [2012-1726]

Agencies

• BUREAU OF CONSUMER FINANCIAL PROTECTION

[Federal Register Volume 77, Number 25 (Tuesday, February 7, 2012)]
[Proposed Rules]
[Pages 6310-6334]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-1726]



Federal Register / Vol. 77, No. 25 / Tuesday, February 7, 2012 / 
Proposed Rules

[[Page 6310]]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1005

[Docket No. CFPB-2011-0009]
RIN 3170-AA15


Electronic Fund Transfers (Regulation E)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Proposed rule; request for public comment.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
proposing to amend Regulation E, which implements the Electronic Fund 
Transfer Act, and the official interpretation to the regulation, which 
interprets the requirements of Regulation E. The proposal is related to 
a final rule, published elsewhere in today's Federal Register, that 
implements section 1073 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act regarding remittance transfers. The proposal 
requests comment on whether a safe harbor should be adopted with 
respect to the phrase ``normal course of business'' in the definition 
of ``remittance transfer provider.'' This definition determines whether 
a person is covered by the rule. The proposal also requests comment on 
several aspects of the final rule regarding remittance transfers that 
are scheduled in advance, including preauthorized remittance transfers. 
In developing the final rule, the Bureau believes that these issues 
would benefit from further public comment.

DATES: Comments must be received on or before April 9, 2012.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2011-
0009 or RIN 3170-AA15, by any of the following methods:
     Electronic: https://www.regulations.gov. Follow the 
instructions for submitting comments.
     Mail: Monica Jackson, Office of the Executive Secretary, 
Bureau of Consumer Financial Protection, 1700 G Street, NW., 
Washington, DC 20006.
     Hand Delivery/Courier in Lieu of Mail: Monica Jackson, 
Office of the Executive Secretary, Bureau of Consumer Financial 
Protection, 1700 G Street, NW., Washington, DC 20006.
    All submissions must include the agency name and docket number or 
Regulatory Information Number (RIN) for this rulemaking. In general, 
all comments received will be posted without change to https://www.regulations.gov. In addition, comments will be available for public 
inspection and copying at 1700 G Street, NW., Washington, DC 20006, on 
official business days between the hours of 10 a.m. and 5 p.m. Eastern 
Time. You can make an appointment to inspect the documents by 
telephoning (202) 435-7275.
    All comments, including attachments and other supporting materials, 
will become part of the public record and subject to public disclosure. 
Sensitive personal information, such as account numbers or social 
security numbers, should not be included. Comments will not be edited 
to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Mandie Aubrey, Dana Miller, or Stephen 
Shin, Counsels, or Krista Ayoub and Vivian Wong, Senior Counsels, 
Division of Research, Markets, and Regulations, Bureau of Consumer 
Financial Protection, 1700 G Street, NW., Washington, DC 20006, at 
(202) 435-7000.

SUPPLEMENTARY INFORMATION: 

I. Overview

    Section 1073 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act) \1\ mandates a new comprehensive 
consumer protection regime for remittance transfers sent by consumers 
in the United States to individuals and businesses in foreign 
countries. The Bureau of Consumer Financial Protection (Bureau) is 
publishing a final rule (January 2012 Final Rule) elsewhere in today's 
Federal Register to implement the new regime. The Bureau is publishing 
this notice of proposed rulemaking to seek comment on whether to 
provide additional safe harbors and flexibility in applying the final 
rule to certain transactions and remittance transfer providers.
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    \1\ Public Law 111-203, 124 Stat. 1376, section 1073 (2010).
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    The Dodd-Frank Act, which was enacted July 21, 2010, amends the 
Electronic Fund Transfer Act (EFTA) \2\ to create a multi-faceted 
regime governing most electronic transfers of funds sent by consumers 
in the United States to recipients in other countries. For covered 
transactions conducted by ``remittance transfer providers'' as defined 
by the statute, the regime requires: (i) The provision of disclosures 
concerning the exchange rate and amount to be received by the 
remittance recipient, prior to and at the time of payment by the 
consumer for the transfer; (ii) Federal rights regarding transaction 
cancellation periods; (iii) investigation and remedy of errors by 
remittance transfer providers; and (iv) standards for the liability of 
remittance transfer providers for the acts of their agents. Authority 
to implement the new Dodd-Frank Act provisions transferred from the 
Board of Governors of the Federal Reserve System (Board) to the Bureau 
effective July 21, 2011.\3\
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    \2\ 15 U.S.C. 1693 et seq. EFTA section 919 is codified in 15 
U.S.C. 1693o-1.
    \3\ Because the Dodd-Frank Act requires that regulations to 
implement certain provisions be issued by January 21, 2012, the 
Board issued a Notice of Proposed Rulemaking in May 2011 (May 2011 
Proposed Rule) with the expectation that the Bureau would complete 
the rulemaking process. 76 FR 29902 (May 23, 2011).
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    This proposal has two parts. First, it seeks comment on addition of 
a possible safe harbor to the definition of the term ``remittance 
transfer provider'' to make it easier to determine when certain 
companies are excluded from the statutory scheme because they do not 
provide remittance transfers in ``the normal course of business.'' 
Second, it seeks comment on a possible safe harbor and other 
refinements to disclosure and cancellation requirements for certain 
transfers scheduled in advance, including ``preauthorized'' remittance 
transfers that are scheduled in advance to recur at substantially 
regular intervals. The Bureau believes that providing additional 
guidance on these issues may help both to reduce compliance burden for 
providers and to increase the benefits of the disclosure and 
cancellation requirements for consumers.
    The final rule adopted by the Bureau provides a one-year 
implementation period. The Bureau expects to complete any further 
rulemaking on matters raised in this proposal on an expedited basis 
before the January 2013 effective date for the final rule. As detailed 
in the SUPPLEMENTARY INFORMATION to the January 2012 Final Rule, the 
Bureau will work actively with consumers, industry, and other 
regulators in the coming months to facilitate implementation of the new 
regime.

II. Summary of Final Rule

    Elsewhere in today's Federal Register, the Bureau is publishing the 
final rule (January 2012 Final Rule) to implement the remittance 
transfer provisions in section 1073 of the Dodd-Frank Act. The final 
rule largely adopts the proposal as published in the May 2011 Proposed 
Rule, with several amendments and clarifications based on commenters' 
suggestions. The final rule incorporates the definitions of 
``remittance transfer,'' ``sender,'' ``remittance transfer provider,'' 
and ``designated recipient'' set forth in the statute. With regard to 
statutory language excluding any person

[[Page 6311]]

that does not provide remittance transfers in the ``normal course of 
its business'' from the definition of ``remittance transfer provider,'' 
the rule adopts a facts and circumstances test.
    The final rule generally requires a remittance transfer provider to 
provide a written pre-payment disclosure to a sender containing 
information about the specific transfer requested by the sender, such 
as the exchange rate, applicable fees and taxes, and the amount to be 
received by the designated recipient. Under the final rule, the 
remittance transfer provider also is required generally to provide a 
written receipt when payment is made for the transfer, which is when 
the payment is authorized. The receipt must include the information 
provided on the pre-payment disclosure, as well as additional 
information such as the date of availability, the recipient's contact 
information, and information regarding the sender's error resolution 
and cancellation rights. Consistent with the statute, which permits 
remittance transfer providers to provide estimates only in two narrow 
circumstances, the final rule generally requires that disclosures 
provide the actual exchange rate and amount to be received.
    The final rule also sets forth special requirements for the timing 
and accuracy of disclosures with respect to ``preauthorized remittance 
transfers,'' which are defined as remittance transfers authorized in 
advance to recur at substantially regular intervals. As explained in 
the SUPPLEMENTARY INFORMATION to the January 2012 Final Rule, the 
Bureau recognizes that the market for preauthorized remittance 
transfers is still developing. The Bureau is concerned that if 
providers were required to provide accurate disclosures for subsequent 
preauthorized remittance transfers at the time those transfers are 
authorized, in many cases providers would not be able to offer 
preauthorized remittance transfer products, which could limit consumer 
access to a potentially valuable product.
    The final rule treats the first transaction in a series of 
preauthorized remittance transfers the same as all other remittances 
transfers. Accordingly, the provider must issue a pre-payment 
disclosure at the time the sender requests the transfer and a receipt 
at the time when payment for the transfer is authorized, and the 
disclosures must be accurate when payment for the transfer is 
authorized, unless the statutory exceptions apply.
    But in recognition of the potential risks associated with setting 
exchange rates and the potential difficulty of determining the amount 
to be provided to a designated recipient weeks or months in advance of 
subsequent transfers, the final rule does not require that disclosures 
for the entire series of preauthorized transfers be provided at the 
time of the consumer's initial request and payment authorization. 
Instead, providers must issue pre-payment disclosures and receipts for 
each subsequent transfer at later times. Specifically, under the final 
rule, the pre-payment disclosure for each subsequent transfer must be 
provided within a reasonable time prior to the scheduled date of the 
transfer. The receipt for each subsequent transfer generally must be 
provided no later than one business day after the date on which the 
transfer is made. However, if the transfer involves the transfer of 
funds from the sender's ``account'' (as defined by Regulation E) held 
by the provider, the receipt may be provided on or with the next 
regularly scheduled periodic statement for that account or within 30 
days after payment is made for the remittance transfer if a periodic 
statement is not required. The pre-payment disclosure and receipt for 
each subsequent transfer must be accurate when the respective transfer 
is made, unless the statutory exceptions apply.
    The final rule also provides senders specified cancellation and 
refund rights. Under the final rule, a sender generally has 30 minutes 
after payment for the transfer is made to cancel the transfer. The 
final rule, however, contains special cancellation procedures for any 
remittance transfer scheduled by the sender at least three business 
days before the date of the transfer, including preauthorized 
remittance transfers. In that case, the sender must notify the provider 
at least three business days before the scheduled date of the transfer 
to cancel the transfer.

III. Summary of the Proposed Rule

    The proposal relates to two provisions in the January 2012 Final 
Rule. First, the proposal solicits comment on a possible safe harbor to 
define when a person does not provide transfers in the ``normal course 
of business'' for purposes of the definition of ``remittance transfer 
provider.'' Second, the proposal solicits comment on possible changes 
to the rules applicable to remittance transfers that are scheduled in 
advance, including preauthorized remittance transfers. In developing 
the January 2012 Final Rule, the Bureau recognized that additional safe 
harbors and flexibility for providers in complying with certain 
requirements related to these provisions may be needed to facilitate 
compliance with the final rule, and to minimize compliance burden. In 
addition, the Bureau wants to ensure that the disclosures required 
under the final rule for preauthorized remittance transfers are 
beneficial to senders, and are provided at a time that is most useful 
to senders in understanding the terms of the transfers. Moreover, the 
Bureau wants to ensure that the special cancellation procedures for 
remittance transfers scheduled in advance as set forth in the final 
rule provide appropriate protections for senders and do not impose 
undue burden on providers. The Bureau also wants to ensure that senders 
are informed properly of the right to cancel a transfer and the 
deadline to cancel, without undue burden on providers in providing 
these disclosures. The Bureau believes that these issues would benefit 
from further public comment, as summarized below.

Definition of ``Remittance Transfer Provider''

    Consistent with the statute, the January 2012 Final Rule provides 
that a ``remittance transfer provider'' means any person that provides 
remittance transfers for a consumer in the normal course of its 
business, regardless of whether the consumer holds an account with such 
person. A ``remittance transfer provider,'' as defined in the final 
rule, is required to comply with the disclosure and substantive 
protections set forth in subpart B of Regulation E relating to 
remittance transfers. The final rule provides guidance in the 
commentary regarding the phrase ``normal course of business'' using a 
facts and circumstances test, but does not give a numerical threshold.
    The proposal solicits comment on whether the Bureau should adopt a 
safe harbor for determining whether a person is providing remittance 
transfers in the ``normal course of its business,'' and thus is a 
``remittance transfer provider.'' Under the proposed safe harbor, if a 
person makes no more than 25 remittance transfers in the previous 
calendar year, the person does not provide remittance transfers in the 
normal course of business for the current year if it provides no more 
than 25 remittance transfers in the current year. If that person, 
however, makes a 26th remittance transfer in the current calendar year, 
the person would be evaluated under the facts and circumstances test to 
determine whether that person is a remittance transfer provider for 
that transfer and any additional transfers provided through the rest of 
the year. The Bureau requests comment on the proposed safe harbor 
generally, and, if such a safe harbor is appropriate, whether the 
maximum

[[Page 6312]]

number of transfers per calendar year to qualify for the safe harbor 
should be higher or lower than 25 transfers, such as 10 or 50 
transfers, or some other number.

Disclosure Rules For Advance Remittance Transfers

    The January 2012 Final Rule sets forth special requirements for the 
timing and accuracy of disclosures relating to preauthorized remittance 
transfers, which are remittance transfers authorized in advance to 
recur at substantially regular intervals. This proposal seeks comment 
both on a relatively narrow question regarding whether to provide a 
safe harbor regarding certain timing requirements under the final rule 
and more broadly on whether to make further adjustments in the 
disclosure rules for preauthorized remittance transfers and certain 
other remittance transfers requested in advance of the transfer date 
(advance transfers). The options presented explore whether there are 
ways to better balance consumer benefits and potential industry 
compliance burdens in light of the potential costs of setting exchange 
rates and the potential difficulty of determining the amount to be 
received by designated recipients far in advance of a particular 
transfer.
    The proposal first addresses whether the Bureau should modify the 
final rule for a transfer scheduled more than a certain number of days 
(e.g., 10 days) in advance of the consumer's requested transfer date, 
whether that transfer is a standalone transaction or the first in a 
series of preauthorized remittance transfers. The proposal also 
solicits comments on modifications of the final rule as applied to the 
first transfer in a series of preauthorized remittance transfers where 
the amount of the transfers can vary, and the provider does not know 
the exact amount of the first transfer at the time the disclosures for 
that transfer are given. The proposal then seeks comment on whether the 
Bureau should modify the disclosure rules for subsequent transfers in a 
preauthorized series.

Initial Advance Transfers

    The January 2012 Final Rule treats the first transaction in a 
series of preauthorized remittance transfers the same as all other 
remittances transfers by requiring disclosure of the actual exchange 
rate and amount to be provided to the designated recipient unless one 
of the statutory exceptions permitting use of estimates applies. As the 
final rule recognizes with regard to subsequent transfers in the same 
preauthorized series, however, setting exchange rates and determining 
the amount to be received far in advance may pose risks and remittance 
transfer providers may choose not to offer advance scheduling rather 
than developing new risk management strategies or finding partners that 
are willing to do so. The Bureau lacks data on how frequently consumers 
request transfers many days in advance, and seeks comment on whether 
further adjustment of the disclosure regime is warranted to address 
such situations.
    The proposal therefore solicits comment on two potential changes to 
the disclosure requirements: (i) Whether a provider should be permitted 
additional flexibility to provide estimates for certain information in 
the pre-payment disclosure and receipt; and (ii) if additional 
estimates are permitted, whether a provider that uses this additional 
flexibility to provide estimates in the disclosures given at the time 
the transfer is requested and authorized should be required to provide 
a second receipt with accurate information closer to the time the 
transfer is scheduled to occur. The Bureau also solicits comment on 
whether in lieu of providing an estimate of the exchange rate on the 
disclosures for an advance transfer, the Bureau should allow a provider 
to disclose a formula that will be used to calculate the exchange rate 
that will apply to a transfer, and that is based on information that is 
publicly available prior to the time of transfer. The Bureau is 
contemplating these changes to minimize compliance burden on providers 
and to ensure that senders receive accurate information about transfers 
at a time that is most useful to them.
    Specifically, the proposal solicits comment on whether use of 
estimates should be permitted in the following two circumstances: (i) A 
consumer schedules a one-time transfer or the first in a series of 
preauthorized transfers to occur more than 10 days after the transfer 
is authorized; or (ii) a consumer enters into an agreement for 
preauthorized remittance transfers where the amount of the transfers 
can vary and the provider does not know the exact amount of the first 
transfer at the time the disclosures for that transfer are given. For 
the first proposed use of estimates, the Bureau has structured the 
proposed 10-day threshold to mesh with the safe harbor proposed below 
regarding provision of disclosures relating to subsequent preauthorized 
transfers within a ``reasonable time'' prior to the individual 
transfer. The Bureau requests comment on whether this linkage is 
appropriate and whether 10 days is the appropriate cut off for both 
purposes.
    The Bureau also requests comment on whether a provider that uses 
estimates in the pre-payment disclosure and receipt given at the time 
the transfer is requested and authorized in the two situations 
described above should be required to provide a second receipt with 
accurate information within a reasonable time prior to the scheduled 
date of the transfer. The Bureau requests comment on any tradeoffs 
between compliance burdens to providers of allowing an estimate-and-
redisclosure option and the benefit to senders of receiving a second, 
more accurate disclosure. The Bureau also solicits comment on whether 
providing multiple disclosures (one pre-payment disclosure and two 
receipts) for each transfer described above would create information 
overload for consumers.

Subsequent Advance Transfers

    Under the January 2012 Final Rule, a provider must provide a pre-
payment disclosure and receipt for each subsequent transfer in a series 
of preauthorized remittance transfers. The pre-payment disclosure for 
each subsequent transfer must be provided within a reasonable time 
prior to the scheduled date of the transfer. The receipt for each 
subsequent transfer generally must be provided no later than one 
business day after the date on which the transfer is made. The proposal 
solicits comment on two alternative approaches to possible changes to 
the disclosures rules for subsequent transfers: (i) whether the Bureau 
should retain the requirement that a provider give a pre-payment 
disclosure for each subsequent transfer, and should provide a safe 
harbor interpreting the ``within a reasonable time'' standard for 
providing this disclosure; or (ii) whether the Bureau instead should 
eliminate the requirement to provide a pre-payment disclosure for each 
subsequent transfer.
    With respect to the first alternative approach, the Bureau would 
retain the requirement that a provider mail or deliver a pre-payment 
disclosure within a reasonable time prior to the scheduled date of the 
transfer. The Bureau solicits comment on whether it should provide a 
safe harbor interpreting the ``within a reasonable time'' standard for 
providing this disclosure. The proposal specifically solicits comment 
on a safe harbor under which a provider would be deemed to have 
provided the pre-payment disclosure within a reasonable time prior to 
the scheduled date of a subsequent transfer, if the provider mails or 
delivers the pre-payment

[[Page 6313]]

disclosure not later than 10 days before the scheduled date of the 
respective subsequent transfer. The Bureau believes that this proposed 
safe harbor would facilitate compliance with the final rule with 
respect to the timing of the disclosures required for subsequent 
preauthorized remittance transfers. The Bureau requests comment on 
whether the length of time for the safe harbor should be longer or 
shorter than 10 days, and whether different safe harbors should be 
provided based on whether the disclosures are mailed or provided 
electronically.
    With respect to the second alternative approach, the Bureau 
solicits comment on whether the Bureau instead should eliminate the 
requirement that a provider mail or deliver a pre-payment disclosure 
for each subsequent transfer. Specifically, the Bureau solicits comment 
on whether the benefit to senders of receiving a pre-payment disclosure 
for each subsequent transfer justifies the cost to providers of 
providing this disclosure for each subsequent transfer. The Bureau 
solicits comment on whether senders will find the pre-payment 
disclosures useful, for example, (i) to ensure that their deposit or 
other accounts have sufficient funds to cover the upcoming transfers; 
or (ii) to evaluate whether to cancel the subsequent transfers and 
discontinue the preauthorized remittance transfer arrangement. The 
Bureau also requests comment on the relative trade off in compliance 
burdens to providers in providing pre-payment disclosures for each 
subsequent transfer.

Cancellation Requirements Applicable to Certain Remittance Transfers 
Scheduled in Advance, Including Preauthorized Remittance Transfers

    The January 2012 Final Rule provides senders specified cancellation 
and refund rights. Under the final rule, a sender generally has 30 
minutes after payment for the transfer is made to cancel the transfer. 
The final rule, however, contains special cancellation procedures for 
any remittance transfer scheduled by the sender at least three business 
days before the date of the transfer, including preauthorized 
remittance transfers. In that case, the sender must notify the provider 
at least three business days before the scheduled date of the transfer 
to cancel the transfer. In the final rule, the Bureau adopted special 
cancellation provisions for these transfers scheduled in advance (in 
lieu of the general 30 minute cancellation rule) because the Bureau 
believes it is appropriate to provide senders with additional time to 
change their minds about sending a transfer if, for example, 
circumstances change between when the transfer is authorized and when 
the transfer is to be made. At the same time, the Bureau believes that 
it is necessary to give providers sufficient time to process any 
cancellation requests before a transfer is made.
    The Bureau wants to ensure that the special cancellation procedures 
for remittance transfers scheduled in advance as set forth in the final 
rule provide appropriate protections for senders and do not impose 
undue burden on providers. As a result, the Bureau solicits comment on 
whether the three-business-day deadline to cancel accomplishes these 
goals, or whether the deadline to cancel these transfers should be more 
or less than three business days before the scheduled date of the 
transfer.

Notice of Deadline to Cancel

    The Bureau also wants to ensure that senders are informed properly 
of the right to cancel a transfer and the deadline to cancel, without 
undue burden on providers in providing these disclosures. The January 
2012 Final Rule requires that a provider disclose the deadline to 
cancel in the receipt. Under the final rule, a provider must only 
disclose in the receipt for a transfer the deadline to cancel that is 
applicable to that transfer. Thus, for any remittance transfer 
scheduled by the sender at least three business days before the date of 
the transfer, a provider may solely disclose in the receipt information 
about the three-business-day deadline to cancel the transfer. For other 
transfers, the receipt may solely disclose the 30 minute deadline to 
cancel. In addition, in disclosing the three-business-day deadline to 
cancel, under the final rule, the provider is not required to disclose 
a specific date on which the right to cancel will expire, such as 
disclosing: ``You can cancel for a full refund no later than [insert 
calendar date].'' Thus, under the final rule, a provider could use a 
generic disclosure, such as disclosing: ``You can cancel for a full 
refund no later than three business days prior to the scheduled date of 
the transfer.'' The Bureau solicits comment on three issues related to 
the disclosure of the deadline to cancel as set forth in the final 
rule: (i) Whether the three-business-day deadline to cancel transfers 
scheduled in advance should be disclosed in a different manner to 
consumers, such as by requiring a provider to disclose in the receipt 
the specific date on which the right to cancel will expire; (ii) 
whether a provider should be allowed on a receipt to describe both the 
three-business-day and 30 minute deadline-to-cancel time frames and 
either describe to which transfers each deadline to cancel is 
applicable, or alternatively, use a check box or other method to 
indicate which deadline is applicable to the transfer; and (iii) 
whether a provider should be required to disclose the deadline to 
cancel in the pre-payment disclosure for each subsequent transfer, 
rather than in the receipt given for each subsequent transfer.

IV. Legal Authority

    Section 1073 of the Dodd-Frank Act creates a new section 919 of the 
EFTA and requires remittance transfer providers to provide disclosures 
to senders of remittance transfers, pursuant to rules prescribed by the 
Bureau. In particular, providers must give senders a written pre-
payment disclosure containing specified information applicable to the 
sender's remittance transfer. The remittance transfer provider must 
also provide a written receipt that includes the information provided 
on the pre-payment disclosure, as well as additional specified 
information. EFTA section 919(a).
    In addition, EFTA section 919 provides for specific error 
resolution procedures. The Act directs the Bureau to promulgate error 
resolution standards and rules regarding appropriate cancellation and 
refund policies. EFTA section 919(d). Finally, EFTA section 919 
requires the Bureau to establish standards of liability for remittance 
transfer providers, including those that act through agents. EFTA 
section 919(f). Except as described below, the proposed changes are 
proposed under the authority provided to the Bureau in EFTA section 
919, and as more specifically described in this SUPPLEMENTARY 
INFORMATION.
    In addition to the statutory mandates set forth in the Dodd-Frank 
Act, EFTA section 904(a) authorizes the Bureau to prescribe regulations 
necessary to carry out the purposes of the title. The express purposes 
of the EFTA, as amended by the Dodd-Frank Act, are to establish ``the 
rights, liabilities, and responsibilities of participants in electronic 
fund and remittance transfer systems'' and to provide ``individual 
consumer rights.'' EFTA section 902(b). EFTA section 904(c) further 
provides that regulations prescribed by the Bureau may contain any 
classifications, differentiations, or other provisions, and may provide 
for such adjustments or exceptions for any class of electronic fund 
transfers or remittance transfers that the Bureau deems necessary or 
proper to effectuate the purposes of the

[[Page 6314]]

title, to prevent circumvention or evasion, or to facilitate 
compliance.
    As described in more detail in the SUPPLEMENTARY INFORMATION, the 
provisions proposed in part or in whole pursuant to the Bureau's 
authority in EFTA sections 904(a) and 904(c) include: \4\ Sec.  
1005.32(b)(2).\5\ The Bureau also solicits comments on various 
regulatory provisions some of which would require use of EFTA sections 
904(a) and (c) authority but for which proposed regulatory text is not 
provided.
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    \4\ Throughout the SUPPLEMENTARY INFORMATION, the Bureau is 
citing its authority under both EFTA section 904(a) and EFTA section 
904(c) for purposes of simplicity. The Bureau notes, however, that 
with respect to some of the provisions referenced in the text, use 
of only one of the authorities may be sufficient.
    \5\ The consultation and economic impact analysis requirement 
previously contained in EFTA sections 904(a)(1)-(4) were not amended 
to apply to the Bureau. Nevertheless, the Bureau consulted with the 
appropriate prudential regulators and other Federal agencies and 
considered the potential benefits, costs, and impacts of the rule to 
consumers and covered persons as required under section 1022 of the 
Dodd-Frank Act, and through these processes would have satisfied the 
requirements of these EFTA provisions if they had been applicable.
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VI. Section-by-Section Analysis

Section 1005.30 Remittance Transfer Definitions

30(f) Remittance Transfer Provider
    As adopted in the January 2012 Final Rule, Sec.  1005.30(f) and the 
accompanying interpretations implement the definition of ``remittance 
transfer provider'' in EFTA section 919(g)(3). Section 1005.30(f) 
states that a ``remittance transfer provider'' means any person that 
provides remittance transfers for a consumer in the normal course of 
its business, regardless of whether the consumer holds an account with 
such person. A ``remittance transfer provider,'' as defined in Sec.  
1005.30(f), is required to comply with disclosure and substantive 
protections set forth in subpart B of Regulation E relating to 
remittance transfers.
    Comment 30(f)-2 provides guidance interpreting the phrase ``normal 
course of business'' for purposes of the definition of ``remittance 
transfer provider'' in Sec.  1005.30(f). Specifically, comment 30(f)-2 
states that whether a person provides remittance transfers in the 
normal course of business depends on the facts and circumstances, 
including the total number and frequency of remittance transfers sent 
by the provider. For example, if a financial institution generally does 
not make international consumer wire transfers available to customers, 
but sends a couple of international consumer wire transfers in a given 
year as an accommodation for a customer, the institution does not 
provide remittance transfers in the normal course of business. In 
contrast, if a financial institution makes international consumer wire 
transfers generally available to customers (whether described in the 
institution's deposit account agreement, or in practice) and makes 
transfers multiple times each month, the institution provides 
remittance transfers in the normal course of business.
    Under the final rule, comment 30(f)-2 does not provide any de 
minimis numerical threshold under which a person would be deemed not to 
be providing remittance transfers in the normal course of business, and 
thus would not be a ``remittance transfer provider'' for purposes of 
Sec.  1005.30(f). However, the Bureau recognizes that a bright-line 
safe harbor may minimize compliance burden. Thus, the Bureau proposes 
to revise comment 30(f)-2 to provide that if a person provided no more 
than 25 remittance transfers in the previous calendar year, the person 
does not provide remittance transfers in the normal course of business 
for the current calendar year if it provides no more than 25 remittance 
transfers in the current calendar year. If that person, however, makes 
a 26th remittance transfer in the current calendar year, the person 
would be evaluated under the facts and circumstances test to determine 
whether the person is a remittance transfer provider for that transfer 
and any other transfer provided through the rest of the year.
    The proposed comment provides several examples to demonstrate how 
this proposed safe harbor would apply. For instance assume that in 
calendar year 2012, a person provided 20 remittance transfers. This 
person is not providing remittance transfers in the normal course of 
business for calendar year 2013 if it provides no more than 25 
remittance transfers in calendar year 2013. Assume further that the 
person makes 15 transfers in calendar year 2013. Because this person 
limited its remittance transfers to no more than 25 in 2013, it would 
not be required to comply with the rules in subpart B for any of its 
transfers in 2013. However, if the person provides a 26th transfer in 
calendar year 2013, then the person will be evaluated under the facts 
and circumstances test for determining whether the person is a 
remittance transfer provider for that and any other transfer provided 
through the rest of the calendar year. In addition, if the person 
provides a 26th transfer for calendar year 2013, this person would not 
qualify for the safe harbor in 2014 because the person did not make 25 
or fewer remittance transfers in 2013. In this case, in 2014, the 
person would be evaluated under the facts and circumstances test in 
determining whether the person is a remittance transfer provider for 
all transfers made in 2014. Under the proposed safe harbor, a person 
would not be subject to the definition of ``remittance transfer 
provider'' and thus, would not be required to comply with the 
disclosure and substantive protections set forth in subpart B of 
Regulation E relating to remittance transfers if it made no more than 
25 remittance transfers for each calendar year.
    The proposed threshold number of no more than 25 transfers per 
calendar year for the safe harbor is consistent with the general 
threshold for coverage under the Bureau's Regulation Z, which relates 
to credit transactions. Under Regulation Z, 12 CFR part 1026, a 
``creditor'' as defined by the regulation, must comply with certain 
disclosure requirements and substantive protections related to credit 
transactions contained in Regulation Z. Under Regulation Z, a creditor 
is an entity that regularly extends consumer credit under specified 
circumstances. Generally, under Regulation Z, a person regularly 
extends consumer credit in the current calendar year when it either 
extended consumer credit more than 25 times in the preceding calendar 
year or more than 25 times in the current calendar year.\6\ See Sec.  
1026.2(a)(17) and comment 2(a)(17)(i)-4.\7\ However, the Bureau 
solicits comment on whether a threshold safe harbor is appropriate in 
this context, and if so, whether other threshold numbers for the safe 
harbor, such as 10 or 50 transfers, may be appropriate as the threshold 
number to carve out persons that provide remittance transfers on a 
limited basis, primarily as an accommodation to the customers of its 
regular business.
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    \6\ Regulation Z in some cases provides additional protections 
for credit secured by a dwelling and certain high cost mortgages. 
For example, with respect to whether a person is a creditor, a 
person regularly extends consumer credit in the current calendar 
year if it either extended consumer credit for more than five times 
for transactions secured by a dwelling in the previous calendar year 
or more than five times in the current calendar year. In addition, a 
person regularly extends consumer credit if it extends consumer 
credit for just one high-cost mortgage in a 12 month period. See 12 
CFR 1026.2(a)(17).
    \7\ The Bureau notes that it has issued a separate notice of 
request for information on whether it should revise these threshold 
numbers in Regulation Z. See 76 FR 75825 (Dec. 5, 2011).
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    Without a safe harbor, persons who currently provide remittance 
transfers, or are contemplating doing so, may face

[[Page 6315]]

uncertainty and litigation risk as to whether they meet the definition 
of ``remittance transfer provider'' when they provide a small number of 
transfers in a given year. These persons may decide to discontinue 
providing these transfers, or choose not to start making these 
transfers, to the detriment of their customers, rather than taking on 
the burden of complying with the remittance transfer rules for only a 
small number of transfers per year. The Bureau believes that the safe 
harbor may be particularly useful to relatively small financial 
services providers that provide remittance transfers on an infrequent 
basis.
    The Bureau recognizes that if a safe harbor is adopted, in some 
cases, consumers would not receive the disclosures and protections set 
forth in the remittance transfer rules because the person providing 
these transfers would not be deemed a ``remittance transfer provider'' 
for purposes of subpart B of Regulation E. However, Congress itself 
created this result by providing that the disclosure and other 
provisions apply only to persons that provide remittance transfers in 
the normal course of business. The statutory language, by defining 
``remittance transfer provider'' as any person that provides remittance 
transfers for a consumer in the normal course of its business, implies 
that there will be persons that provide remittance transfers outside 
the normal course of business that are not subject to the statutory 
disclosure and protection requirements related to remittance transfers. 
The Bureau believes that the inclusion of the phrase ``normal course of 
business'' in the statutory definition was meant to exclude persons 
that provide remittance transfers on a limited basis, such as an 
accommodation to the customers of its regular business. In addition, as 
described above, the Bureau is concerned that persons may discontinue 
providing a small number of transfers per year to accommodate customers 
of its regular business, or choose not to start making these transfers, 
to the detriment of their customers, rather than taking on the burden 
of complying with the remittance transfer rules for only a small number 
of transfers per year.
    The Bureau notes that industry commenters in response to the 
Board's May 2011 Proposed Rule provided suggestions for a de minimis 
threshold amount that were extremely high. Suggestions ranged from 
1,200 or fewer transfers annually to 2,400 transfers annually, per 
method (i.e., 2,400 wire transfers plus 2,400 international ACH 
transfers). The commenters did not provide any data on the overall 
distribution and frequency of remittance transfers across various 
providers to support treating such high numbers of transactions as 
being outside the normal course of business. Nor did they suggest other 
means of determining when remittance transfer providers are engaging in 
transfers merely as an accommodation to occasional consumer requests 
rather than part of a business line of payment services. Absent 
significant additional information, the Bureau is skeptical that 
Congress intended to exclude companies averaging 100 or more remittance 
transfers per month from the statutory scheme. Based on the data 
presented by commenters, such a range would appear to exclude the 
majority of providers of open network transfers, such as international 
wire transfers and ACH transactions, from the rule. For example, one 
trade association commenter stated that most respondents to an 
information request said that they make fewer than 2,400 international 
transactions per year. As discussed in the SUPPLEMENTARY INFORMATION to 
the January 2012 Final Rule, the Bureau believes that the statute 
clearly covers open network transfers, such as wire transfers and ACH 
transactions. Providing an exception based on the ranges suggested by 
these commenters would allow many financial institutions that arguably 
regularly and in the normal course of business provide remittance 
transfers to not be subject to the regulation. The Bureau believes in 
general that the term ``normal course of business'' covers remittance 
transfer activities at a level significantly lower than the ranges 
suggested by these commenters.
    The Bureau requests comment on the proposed safe harbor. As 
discussed above, the Bureau requests comment on whether a threshold 
safe harbor is appropriate in this context, and whether the maximum 
number of transfers per calendar year to qualify for the safe harbor 
should be higher or lower than 25 transfers, and if so, what the 
maximum number should be and why. The Bureau also specifically seeks 
information regarding how many persons would likely qualify for any 
such a safe harbor; whether such a safe harbor would be more or less 
likely to apply to particular types of businesses, as compared to 
others; the potential benefits for consumers if a higher or lower 
number were chosen; and any specific costs that would be implicated by 
a higher or lower figure. The Bureau would benefit from comments both 
from companies or other persons that send far more than 25 transfers 
per year and from companies or other persons that send around 25 
transfers per year.

Section 1005.31 Disclosures

    Section 1005.31 generally sets forth the disclosure requirements 
for remittance transfers, except for disclosures provisions for 
preauthorized remittance transfers which are set forth in Sec.  
1005.36. Under Sec.  1005.31, remittance providers are required to 
provide two sets of disclosures to a sender in connection with a 
remittance transfer: (i) a pre-payment disclosure when a sender 
requests a transfer; and (ii) a written receipt to the sender when 
payment is made, which is when the payment is authorized. The pre-
payment disclosure provides information about the transfer, such as the 
exchange rate, fees, and the amount to be received by the designated 
recipient. The receipt includes the information provided on the pre-
payment disclosure, as well as additional information, such as the 
promised date of delivery, contact information for the designated 
recipient, and information regarding the sender's error resolution 
rights. Consistent with the statute, which permits remittance transfer 
providers to provide estimates only in two narrow circumstances as set 
forth in Sec.  1005.32, the final rule generally requires that 
disclosures provide the actual exchange rate and amount to be received.
    For the reasons discussed in the section-by-section analysis to 
Sec.  1005.36, the Bureau solicits comment on whether a provider should 
be permitted to use estimates for certain information in the pre-
payment disclosures and receipts where a consumer schedules a one-time 
transfer or the first in a series of preauthorized transfers to occur 
more than 10 days after the transfer is authorized. See proposed Sec.  
1005.32(b)(2). Also, as discussed in more detail in the section-by-
section analysis to Sec.  1005.36, the Bureau also solicits comment on 
whether a provider that uses estimates in the situation described above 
should be required to provide a second receipt with accurate 
information within a reasonable time prior to the scheduled date of the 
transfer.

Section 1005.32 Estimates

    Generally, remittance transfer providers are not permitted to use 
estimates for the information provided in the pre-payment disclosures 
and receipts. The January 2012 Final Rule implements the two statutory 
exceptions that permit a remittance transfer provider to disclose an 
estimate of the amount of currency to be

[[Page 6316]]

received, as well as other information such as the exchange rate that 
is used to calculate the amount of currency. Section 1005.32(a) 
contains the first exception, which applies to depository institutions 
that cannot determine certain disclosed amounts for reasons beyond 
their control. Section 1005.32(b) contains the second exception, which 
applies when the provider cannot determine certain amounts to be 
disclosed because of: (i) the laws of a recipient country; or (ii) the 
method by which transactions are made in the recipient country.
    To effectuate the purposes of the EFTA and facilitate compliance, 
the Bureau proposes to use its EFTA section 904(a) and (c) authority to 
add a third exception in a new Sec.  1005.32(b)(2) that would provide 
additional flexibility for providers to use estimates in pre-payment 
disclosures and receipts where a consumer schedules a one-time transfer 
or the first in a series of preauthorized transfers to occur more than 
10 days after the transfer is authorized. This exception is discussed 
in more detail in the section-by-section analysis to Sec.  1005.36 
below. The current exception relating to transfers to certain countries 
that is contained in Sec.  1005.32(b) would be moved to Sec.  
1005.32(b)(1), and conforming changes would be made to interpretation 
provisions that reference this exception.

Section 1005.36 Transfers Scheduled in Advance

    The January 2012 Final Rule sets forth special requirements for the 
timing and accuracy of disclosures relating to preauthorized remittance 
transfers, which are remittance transfers authorized in advance to 
recur at substantially regular intervals. This proposal seeks comment 
both on a relatively narrow question regarding whether to provide a 
safe harbor regarding certain timing requirements under the final rule 
and more broadly on whether to make further adjustments in the 
disclosure rules for preauthorized remittance transfers and other 
remittance transfers requested more than a certain number of days 
(e.g., 10 days) in advance of the transfer date (advance transfers). 
The options presented explore whether there are ways to better balance 
consumer benefits and potential industry compliance burdens in light of 
the potential risks associated with setting exchange rates and the 
potential difficulty of determining the amount to be received by 
designated recipients far in advance of a particular transfer. The 
proposal first considers modification of the final rule as applied to a 
transfer scheduled more than a certain number of days (e.g., 10 days) 
in advance of the consumer's requested transfer date, whether that 
transfer is a standalone transaction or the first in a series of 
preauthorized remittance transfers. The proposal also solicits comment 
on modifications of the final rule for the first transfer in a series 
of preauthorized remittance transfers where the amount of the 
preauthorized remittance transfers can vary, and the provider does not 
know the exact amount of the first transfer at the time the disclosures 
for that transfer are given. The proposal then also requests comment on 
whether the Bureau should modify the disclosure rules for subsequent 
transfers in a preauthorized series.
    The Bureau recognizes that the market for preauthorized remittance 
transfers is still developing. The Bureau is concerned that without 
specific rules and flexibility for providers in complying with certain 
disclosure requirements, providers may either discontinue providing 
preauthorized remittance transfer products, or may not begin to offer 
those products in the future, to the detriment of senders who may enjoy 
the convenience that these products provide. The final rule provides 
remittance transfer providers some relief by allowing them to shift 
their obligation to provide pre-payment disclosures for subsequent 
transfers to a ``reasonable time'' prior to the particular transfer; 
this provision should reduce the potential costs associated with 
setting exchange rates far in advance of a transfer. However, the 
Bureau recognizes that similar issues may arise in situations in which 
a consumer schedules the first in a series of preauthorized transfers 
or a single standalone transfer significantly in advance of the 
transfer date.
    The Bureau also solicits comment on possible changes to the 
cancellation requirements for certain remittance transfers scheduled in 
advance. The Bureau wants to ensure that the three-business-day 
deadline to cancel remittance transfers scheduled in advance as set 
forth in the final rule provides appropriate protections for senders 
and does not impose undue burden on providers, and that senders are 
informed properly of the right to cancel a transfer.
Timing and Accuracy Requirements for Disclosures About Initial Advance 
Transfers
    The January 2012 Final Rule treats the first transaction in a 
series of preauthorized remittance transfers the same as all other 
remittances transfers by requiring disclosure of the actual exchange 
rate and amount to be provided to the designated recipient unless one 
of the statutory exceptions permitting use of estimates applies. The 
final rule recognizes for subsequent transfers in the same 
preauthorized series, however, that setting exchange rates far in 
advance may require more sophisticated risk management strategies and 
remittance transfer providers may choose not to offer advance 
scheduling rather than developing such strategies (or finding partners 
that are willing to do so). The Bureau lacks data on how frequently 
consumers request transfers many days in advance, and seeks comment on 
whether further adjustment of the disclosure regime is warranted to 
address such situations.
    As discussed in more detail below, the proposal solicits comment on 
whether use of estimates should be permitted in the following two 
circumstances: (i) A consumer schedules a one-time transfer or the 
first in a series of preauthorized transfers to occur more than 10 days 
after the transfer is authorized; or (ii) a consumer enters into an 
agreement for preauthorized remittance transfers where the amount of 
the transfers can vary, and the provider does not know the exact amount 
of the first transfer at the time the disclosures for that transfer are 
given. The Bureau also solicits comment on whether a provider that uses 
estimates in the two situations described above should be required to 
provide a second receipt with accurate information within a reasonable 
time prior to the schedule date of the transfer.
Estimates Where the Transfer Is Scheduled To Occur More Than 10 Days 
After the Transfer Is Authorized
    The Bureau proposes to add an exception in Sec.  1005.32 that would 
provide additional flexibility for providers to use estimates in 
disclosures for certain transfers scheduled in advance. Under proposed 
Sec.  1005.32(b)(2)(i), a provider would be permitted to use estimates 
for certain information in the pre-payment disclosure and receipt for a 
one-time transfer or the first in a series of preauthorized transfers 
to occur more than 10 days after the transfer is authorized. 
Specifically, under proposed Sec.  1005.32(b)(1)(i), a provider 
generally would be allowed to provide estimates in accordance with 
Sec.  1005.32(c) for the following information contained in the pre-
payment disclosure and receipt, as applicable: (i) The exchange rate 
used by the provider for the remittance

[[Page 6317]]

transfer; (ii) the amount that will be transferred to the designated 
recipient, in the currency in which the funds will be received by the 
designated recipient, if required to be disclosed under Sec.  
1005.31(b)(1)(v); (iii) any fees and taxes imposed on the remittance 
transfer by a person other than the provider, in the currency in which 
the funds will be received by the designated recipient; and (iv) the 
amount that will be received by the designated recipient, in the 
currency in which the funds will be received. See Sec. Sec.  
1005.36(b)(1), 1005.31(b)(1)(iv) through (vii), 1005.31(b)(2) and 
1005.31(f); see also proposed comment 32-1.
    Under proposed Sec.  1005.32(b)(2)(ii), a provider would be 
permitted to estimate taxes imposed on the remittance transfer by a 
person other than the provider, in the currency in which the funds will 
be received by the designated recipient, for transfers scheduled more 
than 10 days in advance only if those taxes are a percentage of the 
amount transferred to the designated recipient. Thus, a provider would 
be permitted to estimate taxes imposed in a recipient country only if 
they are calculated as a percentage of the estimated amount transferred 
to the designated recipient. The provider does not need additional 
flexibility to estimate taxes imposed in a recipient country in other 
cases, because in such instances, the taxes do not depend on an 
estimate of the amount of the funds transferred to the recipient.
    Under proposed Sec.  1005.32(b)(2)(iii), fees imposed on the 
remittance transfer by a person other than the provider, in the 
currency in which the funds will be received by the designated 
recipient, may be estimated in only two circumstances: (i) Where the 
fees are calculated as a percentage of the estimated amount transferred 
to the designated recipient, as described in Sec.  1005.31(b)(1)(v); or 
(2) where an ``insured institution'' as defined in Sec.  1005.32(a)(3) 
is permitted to estimate fees under the temporary exemption in Sec.  
1005.32(a). See proposed comment 32(b)(2)-1. Thus, a provider would not 
be permitted to estimate these fees for transfers scheduled more than 
10 days in advance if the fees are a specific sum fee, unless a 
depository institution is otherwise allowed to estimate that fee under 
the temporary exemption in Sec.  1005.32(a).
    The Bureau believes that a provider might be reluctant to allow a 
sender to schedule a transfer too far in advance if the provider is 
required to fix the exchange rate that will apply to the transfer 
(i.e., the retail rate) at the time that it is scheduled. This 
reluctance could arise due to the risk associated with participating in 
foreign exchange markets, and the manners in which providers and their 
partners manage such risk. Many retail exchange rates are set through 
reference to wholesale currency markets in which rates can fluctuate 
frequently.\8\ As a result, whenever there are time lags in between the 
time when the retail rate applied to a transfer is set, the time when 
the relevant foreign currency is purchased, and the time when funds are 
delivered, a provider (and/or its business partner) may face losses due 
to unexpected changes in the value of the relevant foreign currency. 
Providers (and/or their partners) generally use a variety of pricing, 
business processes, or hedging techniques to manage or minimize this 
exchange rate risk. For some, and perhaps many providers (or their 
partners), the task of managing or minimizing exchange risk may become 
more complicated or more costly if the amount of time between when the 
rate is set for a customer and when the transfer is sent increases. 
Setting the retail rate that applies to a transfer far in advance of 
when that transfer is sent may require the provider or other parties 
involved in processing the remittance transfer to use additional or 
more sophisticated risk management tools.
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    \8\ Some foreign exchange rates are set by monetary authorities. 
There are a variety of business models that providers use to 
purchase currency and fund transfers that are received in foreign 
currency. The timing of when foreign currency is purchased, the role 
of the provider in such a purchase, and the role of other 
intermediaries, partners, agents, and other parties can vary.
---------------------------------------------------------------------------

    As a result, the Bureau is concerned that providers--particularly 
relatively small remittance transfer providers--may choose not to offer 
remittance transfers scheduled too far in advance, particularly 
preauthorized remittance transfers that may extend over a series of 
months. The Bureau believes that the market for preauthorized 
remittance transfers is still in its nascent stages. Reluctance to 
further develop and/or offer such products could reduce consumers' 
access to the convenience of advance transfers. In other cases, 
providers may pass any additional costs of risk management on to 
consumers who schedule preauthorized transfers, in the form of less 
favorable exchange rates or higher fees.
    The proposal would give providers an option to schedule advance 
remittance transfers, while potentially limiting the need for 
additional exchange rate risk assumption, management, or minimization 
techniques. Under the proposal, if a transfer is scheduled to occur 
more than 10 days after the transfer is authorized, a provider could 
disclose an estimate of the exchange rate, and other information that 
depends on the exchange rate. The proposal links the time frame for use 
of estimates to the proposed safe harbor described below for when a 
provider would be deemed to have provided the pre-payment disclosure 
for subsequent preauthorized transfers within a ``reasonable time'' 
prior to the scheduled transfer of the respective subsequent transfer. 
Accordingly, remittance transfer providers would be able to use 
estimates under proposed Sec.  1005.32(b)(2) only where a consumer 
requests a transfer more than 10 days in advance, but would be expected 
to provide actual exchange rates and the amount to be provided to the 
recipient if the transfer is scheduled 10 or fewer days in advance. To 
effectuate the purposes of the EFTA and facilitate compliance, the 
Bureau proposes to use its authority under EFTA sections 904(a) and (c) 
to permit this additional flexibility to provide estimates.
    The Bureau solicits comment on the proposed changes allowing 
providers additional flexibility to provide estimates on pre-payment 
disclosures and receipts when the transfer is scheduled by the sender 
to be made more than 10 days after it is authorized. Specifically, the 
Bureau requests comment on whether estimates should be allowed in such 
cases, and if so, the number of days in each case should be more or 
less than 10 days and why. The Bureau specifically seeks information 
and comment regarding the nature of any burden or cost associated with 
setting exchange rates more than 10 days in advance of a payment, and 
the potential effect on consumers to doing so. The Bureau has 
structured the proposed threshold number of days to mesh with the safe 
harbor proposed below regarding provision of disclosures relating to 
subsequent preauthorized transfers within a ``reasonable time'' prior 
to the individual transfer. The Bureau requests comment on whether this 
linkage is appropriate and whether 10 days is the appropriate cut off 
for both purposes.
    The Bureau also recognizes that compared to disclosure of exact 
exchange rates, disclosure of estimated exchange rates will likely 
provide consumers less clear information about the service that they 
are buying, and whether that service is more or less expensive than the 
services offered by competitors. The Bureau therefore also solicits 
comment as described below on whether remittance transfer providers 
should be required to provide a follow-

[[Page 6318]]

up disclosure listing the actual exchange rate and related numbers. 
Finally, the Bureau solicits comment on whether in lieu of providing an 
estimate of the exchange rate on the disclosures for an advance 
transfer, the Bureau should allow a provider to disclose a formula that 
will be used to calculate the exchange rate that will apply to a 
transfer, and that is based on information that is publicly available 
prior to the time of transfer, such that a sender could use that 
formula to calculate the exchange rate that will apply to the transfer.
Estimates When the Amount of the Preauthorized Remittance Transfers Can 
Vary
    In some cases, a sender may set up a preauthorized remittance 
transfer arrangement where the amount of the first transfer and the 
scheduled date of the first transfer are not known at the time the 
arrangement is established. This may occur where the preauthorized 
remittance transfer arrangement is established to pay a bill each month 
(such as a utilities bill) and the amount of the bill and the date the 
bill is due may vary each month. In this case, the sender may not have 
received the next bill at the time the sender is establishing the 
preauthorized remittance transfer arrangement, and thus would not know 
the amount of the next bill and the date it is due.
    The Bureau requests comment on whether a provider should be given 
flexibility to estimate certain information in the disclosures for the 
first scheduled transfer where the preauthorized remittance transfers 
can vary in amount, and the provider does not know the exact amount of 
the first transfer at the time the disclosures for that transfer are 
given. Specifically, the Bureau requests comment on whether the Bureau 
should allow providers in this case to use estimates for the following 
information included on the pre-payment disclosure and receipt given at 
the time the first transfer is requested and authorized: (i) The amount 
of the transfer (in the currency in which the transfer is funded); (ii) 
fees and taxes if they depend on the amount of the transfer; (iii) the 
total amount of the transfer and fees; (iv) the date in the foreign 
country on which the funds will be available, if the provider does not 
know the exact due date of the next bill; (v) the exchange rate used by 
the provider for the remittance transfer; (vi) the amount that will be 
transferred to the designated recipient, in the currency in which the 
funds will be received by the designated recipient, if required to