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MoneyGram delayed transfers and withheld refunds, CFPB and New York attorney general charge

MoneyGram Money Transfer Firm Charged With Violating Consumer Laws

Photo: Raysonho

MoneyGram, one of the largest money transfer companies in the United States, held up funds and withheld refunds, the Consumer Financial Protection Bureau and New York Attorney General’s Office allege in a lawsuit. The company systemically and repeatedly violated consumer laws when it failed to deliver funds promptly to recipients abroad, the agencies contend.

“MoneyGram spent years failing its customers and failing to follow the law, ignoring customer complaints and government warnings in the process,” said CFPB Director Rohit Chopra. “MoneyGram’s long pattern of misconduct must be halted.”

When the CFPB began its MoneyGram investigations between 2014 and 2016, it found problems, Chopra said. In 2019, the CFPB did another review to see if MoneyGram had followed through on promises to fix its problems. However, for more than five years, the CFPB worked with MoneyGram to comply with the law, but MoneyGram failed to make corrections, he said.

Repeat offender

MoneyGram has violated law enforcement orders on many occasions with different agencies.

In 2009, the company agreed to pay $18 million to settle fraud charges brought by the Federal Trade Commission, and it was required to carry out an anti-fraud and agent-monitoring program. But in 2018, after it was given time to carry out that order, MoneyGram had to pay $125 million to settle charges that it failed to do what it promised.

In 2012, MoneyGram agreed to pay $100 million and enter into an agreement with the Department of Justice, admitting it criminally aided and abetted wire fraud and failed to maintain an effective anti-money laundering program. MoneyGram also violated that agreement.

MoneyGram has also faced other law enforcement actions leading to significant consumer remedies and penalties.

Enforcement action

In Thursday’s lawsuit, the CFPB and New York Attorney General’s Office allege that MoneyGram:

  • Stranded customers waiting for their money: MoneyGram held up funds unnecessarily. It harmed people who were relying on that money to pay for living expenses. In addition, the company often failed to tell customers how long it would take to make funds available to people abroad.
  • Botched instructions to its employees on how to resolve disputes: MoneyGram failed to train its employees on how to correctly resolve disputes. It also didn’t report the results of error investigations to consumers and didn’t provide a written explanation of its findings to them.
  • Neglected to develop and document policies and procedures: MoneyGram didn’t have policies and procedures for following money-transferring laws. It also didn’t keep evidence of how errors are resolved, which is required.

The lawsuit seeks remedies for consumers, an injunction to stop future violations, and penalties.

“Our immigrant communities trusted MoneyGram to send their hard-earned money back home to loved ones but MoneyGram let them down,” said New York Attorney General Letitia James. “Consumers deserve to know where their money went.


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