NY’s AG, CFPB Sue MoneyGram Over Alleged Remittance Violations

The Consumer Financial Protection Bureau and New York’s attorney general announced they are suing one of the nation’s largest providers of international money transfers, MoneyGram International Inc., on Thursday over alleged compliance failures that they say persisted despite warnings.

MoneyGramPhoto Credit: Shutterstock

New York Attorney General Letitia James and the CFPB filed the complaint in New York federal court, accusing MoneyGram of repeatedly delaying funds of intended recipients and violating other key regulatory requirements that have been in place since 2013 for remittance providers.

The complaint names Dallas-based MoneyGram and their subsidiary, MoneyGram Payment Systems Inc., as defendants, seeking fines, injunctions and other related relief, highlighted by refunds for affected consumers.

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

MoneyGram said Thursday that it is “fully prepared to vigorously defend itself and expose the meritless nature of today’s complaint in court.”

“As the industry leader in compliance and consumer protection, MoneyGram is deeply disappointed that the CFPB and New York AG chose to file today’s frivolous lawsuit,” the company said, adding that it has “invested heavily in compliance to build a best-in-class compliance program with record-low anti-fraud numbers designed to protect consumers against harm.”

MoneyGram also stated it has already “spent considerable time attempting to educate the CFPB about the company’s robust and effective compliance efforts and the weakness of its case, including the complete absence of any consumer harm.”

Moneygram told investors last year that it could possibly face legal action from the CFPB over alleged violations related to the remittance rule, a 2013 regulation issued by the agency to implement certain legislatively mandated protections for remittance customers.

Earlier this year, the company then announced that it was beginning to discuss a settlement with the CFPB and was earmarking $7.5 million for the potential deal.

MoneyGram sharply criticized Chopra and the CFPB approach to those negotiations in its statement, claiming they walked in the room “with closed minds” and made “increasingly unjustifiable and unprecedented demands upon the company.”

“Ultimately, MoneyGram refused to be strong-armed into an unfair settlement,” the company said.

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