Big remittance firm charged with stranding customers without cash, bungling instructions for resolving disputes

Charging that the company ignored warnings to stop – while stranding customers waiting for their money – the federal consumer financial protection agency and New York State Thursday announced they had jointly sued one of the largest remittance companies in the country.

According to the Consumer Financial Protection Bureau (CFPB), it and the New York Attorney General’s office filed a lawsuit against MoneyGram International, Inc., and MoneyGram Payment Systems, Inc., (MoneyGram) for “systemically and repeatedly violating various consumer financial protection laws and leaving families high and dry.”

The agencies said their lawsuit specifically alleges that the company stranded customers waiting for their money when it failed to deliver funds promptly to recipients abroad.

The action against the remittance company seeks monetary relief for harmed consumers, an injunction to stop future violations, and imposition of civil money penalties, the CFPB said.

The bureau said that Dallas-based MoneyGram International, Inc., has been under scrutiny for some time. It said that between 2014 and 2016, when the agency began its MoneyGram examinations, it found multiple problems. Then in 2019, the CFPB said it did a subsequent exam to see if MoneyGram had followed through on promises to fix its problems. “In short, for more than five years, the CFPB worked with MoneyGram to fully comply with the law, but MoneyGram continually failed to do so,” the agency said.

The CFPB tagged the company as a “repeat offender,” stating that MoneyGram  “is no stranger to financial crime and has violated law enforcement orders on multiple occasions with multiple government agencies.” Specifically, it notes actions in:

  • 2009, when the firm agreed to pay $18 million to settle fraud charges brought by the Federal Trade Commission (FTC) and was required to start a comprehensive anti-fraud and agent-monitoring program;
  • 2018, when the company had to pay $125 million to settle allegations it failed to follow through on the requirements of the 2009 order;
  • 2012, when the firm agreed to forfeit $100 million and enter into a deferred prosecution 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, the CFPB said. The firm has also faced other law enforcement actions leading to significant redress and penalties.

Under the latest allegations, the CFPB said, MoneyGram is charged with:

  • Stranding customers waiting for their money by failing to transmit funds as quickly as possible; it instead “held up funds unnecessarily.” The agency said “holding the money in limbo” resulted in needless delays and harmed people who were relying on that money to pay for necessary living expenses. In addition, the company repeatedly failed to accurately disclose how long it would take to make funds available to the recipients abroad.
  • Bungling instructions to its workers on how to resolve disputes by failing to tell them how to comply with laws and resolving disputes.
  • Neglecting to develop and document policies and procedures for compliance with money-transferring laws, and failing to retain evidence of its compliance with certain error resolution requirements as required.

CFPB and NY Attorney General Sue Repeat Offender MoneyGram For Leaving Families High and Dry

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