MoneyGram Sued for Multiple Alleged Consumer Law Violations

MoneyGram is being sued for allegedly mishandling customer funds and failing to resolve disputes promptly.

A lawsuit filed today by the Consumer Financial Protection Bureau (CFPB) and New York Attorney General Letitia James alleges that the company stranded customers waiting for their money when it failed to deliver funds promptly to recipients abroad.

“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 in a news release. “MoneyGram’s long pattern of misconduct must be halted.”

It’s not the first time MoneyGram has run afoul of the law. 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.

But in 2018, MoneyGram had to pay $125 million to settle allegations that it failed to follow through. In 2012, MoneyGram agreed to forfeit $100 million and enter into a deferred prosecution agreement with the Department of Justice, admitting it failed to maintain an effective anti-money laundering program.

Immigrant funds mishandled

Today’s lawsuit charges that the company repeatedly mishandled funds being sent internationally by immigrants.

“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.”

Customers paid MoneyGram to transmit money as quickly as possible but MoneyGram failed to do so and instead held up funds unnecessarily, the lawsuit charges. 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, according to the complaint.

International firm

Dallas-based MoneyGram International, Inc. (NASDAQ: MGI) is a financial services company that enables consumers to send money, known as remittances. A significant portion of the company’s money-transfer transactions are initiated by immigrants or refugees in the United States sending money back to their native countries.

The company’s reach is broad, operating in more than 200 countries and territories, and serving 47 million customers in 2021. The company is led by Chairman and CEO W. Alex Holmes. In 2021, it had $1.2 billion in revenue.

Today’s complaint seeks monetary relief for harmed consumers, an injunction to stop future violations, and imposition of civil money penalties. The complaint is not a final finding or ruling that the defendants have violated the law.