“Our immigrant communities trusted MoneyGram to send their hard-earned money back home to loved ones but MoneyGram let them down,” said Attorney General James. “Consumers deserve to know where their money went. Companies have an obligation to be transparent with consumers, treat them fairly, and follow the law, but MoneyGram repeatedly failed to do so. Today we are suing MoneyGram to correct their unlawful practices and prevent them from further harming consumers. New Yorkers can trust that my office will always protect them from unscrupulous companies.”
“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.”
MoneyGram is a non-bank financial services company that enables consumers to send money, known as remittances, from the United States to more than 200 countries and territories. The company has 430,000 locations in the U.S. and worldwide, and also operates through a digital platform. A significant portion of the company’s money-transfer transactions are initiated by immigrants or refugees in the U.S. sending money back to their native countries. Hundreds of thousands of New Yorkers use MoneyGram every year for millions of transactions. For example, in 2020, more than 600,000 individuals sent and received money at MoneyGram locations in New York over 3.8 million times. People who send remittances are often low-income or facing other financial constraints and are less likely to have extra money to replace delayed money intended for family or other recipients abroad.
MoneyGram violated federal and state consumer protection laws. Specifically, the Office of the Attorney General (OAG) and the CFPB allege that MoneyGram:
- Left its customers empty handed when funds were not made available to recipients on time: As a money transfer provider, MoneyGram has to comply with the Bank Secrecy Act and anti-money laundering laws and therefore has to conduct screening before transactions are complete. But even after completing the necessary screenings, MoneyGram held remittance transfers in limbo after they were cleared, which in some instances resulted in needless delays of days or even weeks before it completed the transfers or refunded the money to the sender.
- Failed to accurately disclose the date of availability of funds: MoneyGram repeatedly failed to provide fund availability dates that were accurate. Dates disclosed to consumers, repeatedly, were wrong such that there were delays in making funds available to recipients.
- Failed to follow error-resolutions requirements: MoneyGram failed to promptly investigate errors, to make a determination of whether an error occurred within a required time period, to report the result of an error investigation to the consumer within a required time period, to provide a sufficient written explanation of findings or provide required notice of the sender’s right to request documents related to the investigation, and to provide fee refunds to remedy certain errors.
- Failed to develop and maintain policies and procedures: MoneyGram failed to put in place policies and procedures designed to ensure compliance with the law, including error-resolution requirements and document retention obligations. And, accordingly, MoneyGram failed to retain certain evidence.
MoneyGram is a repeat offender of consumer protection and anti-fraud laws. In 2009, the company agreed to pay $18 million to settle fraud charges brought by the Federal Trade Commission, and was required to implement a comprehensive anti-fraud and agent-monitoring program. In 2012, MoneyGram agreed to forfeit $100 million and enter into a deferred prosecution agreement with the U.S. Department of Justice, admitting it criminally aided and abetted wire fraud and failed to maintain an effective anti-money laundering program. In 2016, MoneyGram agreed to pay $13 million to 48 states, including New York, and the District of Columbia, to compensate defrauded consumers and resolve a multi-state investigation into MoneyGram’s anti-fraud practices. In 2018, MoneyGram agreed to pay $125 million, again to the FTC, to settle allegations that it failed to take steps required under the agency’s 2009 order. According to the FTC, that payment was also part of a global settlement that resolved allegations that MoneyGram violated the 2012 deferred prosecution agreement with the DOJ. In March of 2022, MoneyGram agreed to pay $8.25 million for failing to adequately monitor agents engaging in suspicious transactions to China.
Attorney General James and the CFPB’s lawsuit seeks monetary relief for impacted consumers, an injunction to stop future violations, and imposition of civil money penalties.