MoneyGram sued by New York Attorney General and CFPB

International money transfer company MoneyGram harmed its customers by delaying transfers and failing to properly investigate and correct transfer errors, according to a lawsuit filed Thursday by the Consumer Financial Protection Bureau and the New York Attorney General. York.

The lawsuit accuses MoneyGram of repeatedly flouting various consumer protection laws and failing to correct problems identified by regulators. Consumer Affairs officials didn’t say how many customers they say have been harmed, but they did point to MoneyGram’s broad reach: The company passes around $100 billion a year to some 47 million customers in 200 countries.

Immigrant workers often rely on MoneyGram and its competitors to send money to relatives back home. “Consumers deserve to know where their money went,” New York Attorney General Letitia James said in a statement. “Companies have an obligation to be transparent with consumers, treat them fairly, and obey the law, but MoneyGram has repeatedly failed to do so.”

MoneyGram, in a written statement, called the lawsuit “frivolous.” The company has invested heavily “to build a top-notch compliance program with record anti-fraud numbers designed to protect consumers from harm,” he said.

Rohit Chopra, director of the consumer desk, framed MoneyGram’s actions as part of a misdeed package. The company paid $18 million in 2009 to settle Federal Trade Commission fraud charges, and paid $125 million in 2018 to settle charges that it had violated its previous agreement with the commission and an agreement of 2012 with the Department of Justice regarding its anti-fraud. measures.

“I am committed to rooting out corporate misconduct that breaks the law again and again,” Chopra said, echoing points he made in a speech last month calling for tougher penalties for repeat offenders. .

In a regulatory filing in February, the company said it was in settlement talks with the Consumer Affairs Office and had set aside $7.5 million to cover the likely cost of a deal. Bureau officials declined to comment on those talks on Thursday.

MoneyGram said Mr. Chopra and his employees “entered into discussions with closed minds and unfortunately chose to make increasingly unjustifiable and unprecedented demands.”

The lawsuit, filed in Manhattan federal court, said MoneyGram unnecessarily delayed transactions, failed to make required fee refunds when it failed to make a transfer on time, and failed to properly investigate. and responded to complaints about payment errors. Some of the delays were related to MoneyGram’s process for screening transfers for signs of money laundering or other illegal acts, according to the lawsuit.

MoneyGram is acquired by Madison Dearborn Partners, a Chicago-based private equity firm, for $1.8 billion in cash. Pending regulatory approvals, MoneyGram said it expects the deal to close by the end of the year.

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