NEW YORK, United States (CMC) – New York Attorney General Letitia James says she worked with the Consumer Financial Protection Bureau (CFPB) to resolve a lawsuit against one of the largest international money transfer providers in the United States, MoneyGram International, Inc. and MoneyGram Payment Systems, Inc (MoneyGram) for alleged repeated failure to transfer funds to Caribbean and other recipients in a timely manner.
“MoneyGram has failed to timely deliver funds to recipients or issue refunds to consumers when transfers have been delayed,” she said.
“MoneyGram’s unfair practices greatly impacted immigrant communities who relied on the company to send money home to loved ones,” she added.
The lawsuit alleges that MoneyGram failed to inform consumers exactly when their transfers would be available for recipients abroad and failed to implement the necessary policies and procedures to protect consumers, “essentially causing consumers to lose track of their money transfers.” left in the dark when something went wrong”. .
The lawsuit aims to protect consumers by preventing MoneyGram from continuing its “unfair and unlawful practices.”
James said immigrant communities trusted MoneyGram to send their hard-earned money home to loved ones, but MoneyGram let them down.
“Consumers deserve to know where their money has gone. Businesses have a duty to be transparent with consumers, treat them fairly, and obey the law, but MoneyGram has repeatedly failed to do so.
“Today we are suing MoneyGram to correct their illegal practices and stop them from causing further harm to consumers. New Yorkers can trust that my office will always protect them from unscrupulous corporations,” James added.
CFPB Director Rohit Chopra said, “MoneyGram has spent years disappointing its customers and failing to comply with the law, ignoring customer complaints and government warnings,” adding that “MoneyGram’s long pattern of wrongdoing must be stopped.”
MoneyGram is a non-bank financial services company that enables consumers to send money, called wire transfers, from the United States to more than 200 countries and territories, including many in the Caribbean.
The company has 430,000 locations in the U.S. and worldwide and also operates through a digital platform, James said.
According to James, a significant portion of the company’s money transfer transactions are initiated by immigrants or refugees in the US sending money back to their home countries.
The New York Attorney General said hundreds of thousands of New Yorkers use MoneyGram for millions of transactions each year.
For example, she said that in 2020, more than 600,000 people sent and received money at MoneyGram locations in New York over 3.8 million times.
“People making remittances often have low incomes or face other financial constraints, and are less likely to have extra money to replace late money destined for families or other recipients abroad,” James said, adding that MoneyGram violated US federal and state consumer protection laws.
Specifically, the Office of the Attorney General of New York (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 is required to comply with the Bank Secrecy Act and anti-money laundering laws and is therefore required to conduct verification prior to completing transactions,” the lawsuit reads.
“But even after completing the necessary verifications, MoneyGram kept transfers in limbo after their approval, which in some cases caused unnecessary delays of days or even weeks before the transfers were completed or the funds returned to the sender.”
The lawsuit also alleges that MoneyGram “failed to accurately disclose the date of availability of funds” and “repeatedly failed to provide specific dates of availability of funds.”
“Data provided to consumers was repeatedly incorrect, causing delays in getting funds to recipients. MoneyGram has failed to promptly investigate errors, determine whether an error has occurred within a required time, notify the consumer of the result of an error investigation within a required time, provide an adequate written explanation of the findings, or provide any required notice of the right of the sender to request documents related to the investigation and to issue fee refunds in order to correct certain errors.”
James said the company agreed in 2009 to pay $18 million to settle US Federal Trade Commission (FTC) fraud allegations and is committed to implementing a comprehensive anti-fraud and agent surveillance program.
The New York Attorney General also said that in 2012 MoneyGram agreed to forfeit $100 million and entered into a deferred prosecution agreement with the US Department of Justice (DOJ), “in which it admits it was criminally… aided and abetted wire fraud and failed to have an effective anti-money laundering program in place.”
Additionally, James said in 2018 that MoneyGram agreed to pay the FTC $125 million again to resolve allegations that it failed to take steps required by the agency’s 2009 order.
She said the lawsuit seeks financial relief for affected consumers, an injunction to stop future violations and the imposition of civil fines.