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London-listed fintech Wise has been ordered to pay nearly $2.5mn by US regulators for “a series of illegal actions” including misleading advertising of its fees.
The US Consumer Financial Protection Bureau on Thursday demanded Wise pay a $2mn civil penalty and $450,000 in customer compensation for advertising inaccurate fees and failing to properly disclose exchange rates and other costs.
Wise prides itself on offering cheap and quick cross-border payments, without hidden costs. However, regulators found that it had “misled” US customers into believing they would receive lower ATM fees and failed to properly disclose its exchange rate.
The watchdog also found that Wise had failed to refund remittance fees in the timeframe required by law when customers’ payments did not arrive on time.
“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.”
Shares in the fintech were broadly flat in early trading in London on Friday.
Wise said it had “inadvertently been operating in ways the Bureau deemed necessary to address”, adding that the problems were mainly “technical issues”, but in limited cases some US customers saw “slightly incorrect fees”, which it “proactively and voluntarily compensated in full”.
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”.
The company said the probe had been conducted in 2020 and 2021 and that it had paid $450,000 in compensation to affected customers.
Wise, which was founded in 2011, was hailed as a London success story when it listed on the London Stock Exchange 10 years later.
But its international expansion has been rocky. The company received a $360,000 fine from the United Arab Emirates’ financial regulator over failures in its anti-money laundering controls in 2021.
The Financial Times also previously reported that in 2022, European regulators forced the start-up into a formal remediation plan after they found that it lacked proof of address for hundreds of thousands of customers.
In 2023, Wise ended its US partnership with Evolve Bank, which has since been hit by enforcement action from the Federal Reserve Board due to risk management, anti-money laundering and compliance failures. A data breach at Evolve also affected Wise customers, the UK fintech said last year.
Wise announced its launch in Mexico earlier this week as it seeks to increase its share of the American remittance market.
