FinTech Wunderkind Wise Hit with $2.5mn Fine Over Misleading Ads
A London-listed Fintech firm that caused ripples in the payments world has been hit with a multi-million dollar fine for “a series of illegal actions”.
The penalty has been levelled by the US Consumer Financial Protection Bureau and is for misleading its US customers about fees. Wise disrupted the cross-border payments world, promising quick and easy payments but with no hidden costs.
However the company is accused of “misleading” “…US customers into believing they would receive lower ATM fees and failed to properly disclose its exchange rate”, says The Financial Times. The watchdog says that the company not only misled its customers but, when payments did not arrive on time, it did not refund remittance fees in the timeframe that is dictated by the law.
“By deceiving customers, Wise gave itself an unfair advantage over other competitors in the remittances market,” said CFPB director Rohit Chopra. “New technology can help make money transfers cheaper and more convenient, but companies must be truthful and live up to long-standing law.”
Wise, which must now pay a $2mn civil penalty and $450,000 in customer compensation, put the problems down to “technical issues” and also claims its actions had been “inadvertent”. It added: “While Wise strongly disagrees with the CFPB’s characterisation of Wise’s conduct, we worked with the CFPB in good faith to conclude the matter”.
This isn’t the first time the Fintech company has been in trouble with the authorities. The FT reports that it was fined by United Arab Emirates’ financial regulator “…over failures in its anti-money laundering controls in 2021”. It also got in trouble with EU regulators in 2022.
