CFPB and New York Attorney General Team Up to Sue MoneyGram

The plaintiffs allege that the company has broken consumer protection laws.

The Consumer Financial Protection Bureau (CFPB) and New York Attorney General Letitia James have announced that they are suing MoneyGram International, Inc. and MoneyGram Payment Systems, Inc. for repeatedly violating consumer protection laws. The federal agency and New York's chief law enforcement officer allege that the company has ignored consumer complaints and government warnings for years.

Key Takeaways

  • The CFPB and New York's attorney general have filed a lawsuit against MoneyGram.
  • They allege that the remittance company has violated consumer protection laws and law enforcement orders to the detriment of its customers.
  • The complaint is seeking monetary relief for those who have been affected, an injunction to halt future violations, and imposition of civil penalties.

MoneyGram Is Once Again in Hot Water With Regulators

MoneyGram is one of the largest remittance providers in the U.S., offering money orders, money transfers, bill payments, prepaid card reload services, and more.

But according to the CFPB and New York's attorney general, the company has failed to promptly deliver funds abroad, leaving recipients high and dry. A large portion of the Dallas-based company's business involves immigrants and refugees transferring money back home to their native countries.

Since the CFPB provided the Remittance Rule in 2013, MoneyGram has failed over and over again to comply with the law, despite multiple follow-ups by the CFPB. The federal agency also alleges that the company has violated the Consumer Protection Act of 2010 and Regulation E, which, along with the Remittance Rule, implements the Electronic Fund Transfer Act.

More specifically, the CFPB and Attorney General James say that MoneyGram has:

  • Stranded customers: MoneyGram has held up funds from money transfers unnecessarily instead of delivering them to the recipients in a prompt manner. These delays have had a significant impact on people who rely on the transferred money to cover living expenses. The company has also failed to accurately disclose how long transfers take.
  • Failed to instruct employees on how to resolve disputes: The company botched its instructions to employees on how to comply with federal laws that guide the dispute resolution process and also failed to report the results of its errors investigation or a written explanation of its findings to consumers.
  • Failed to develop and document policies and procedures: MoneyGram neglected to put together policies and procedures to stay in compliance with laws that regulate money transfers and also failed to retain required evidence of its compliance with certain error resolution requirements.

The CFPB has clarified that the complaint is not a final ruling that MoneyGram has violated the law. It's unclear how the parties will proceed, but MoneyGram has settled lawsuits with regulators in the past, including an $18 million fraud lawsuit brought by the Federal Trade Commission in 2009 and a $125 million settlement in 2018 when it was found that the company didn't implement the 2009 order to implement a comprehensive anti-fraud and agent-monitoring program.

After publication of this story attorneys for MoneyGram reached out to Investopedia to reference their press release rebutting the CFPB and New York Attorney General Office's complaint, which stated that "MoneyGram is the industry leader in compliance and has invested heavily to protect consumers and underprivileged communities against harm. Regulators' unreasonable demands forced the company to litigate, but MoneyGram is fully prepared to defend itself and its best-in-class compliance program in court".

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  1. MoneyGram. "MoneyGram Home Page."

  2. Consumer Financial Protection Bureau. "CFPB and NY Attorney General Sue Repeat Offender MoneyGram For Leaving Families High and Dry."