The
complaint against MoneyGram, one of the largest U.S. providers
of remittance transfers, was filed in Manhattan federal court by
the U.S. Consumer Financial Protection Bureau and New York
Attorney General Letitia James.
Remittance transfers let people in the United States send money
electronically to people in other countries, and exceed $100
billion annually.
MoneyGram was accused of having repeatedly "stranded" recipients
waiting for their money, given senders inaccurate information
about when transfers would be completed and failed to address
customer complaints in accordance with the 2013 rule.
Problems persist despite a series of software and technology
updates, with some transactions still getting "stuck" in
MoneyGram's systems, the complaint said.
"MoneyGram spent years failing its customers and failing to
follow the law, ignoring customer complaints and government
warnings in the process," CFPB Director Rohit Chopra said in a
statement. "MoneyGram's long pattern of misconduct must be
halted."
In a statement, Dallas-based MoneyGram said it plans to defend
against the "frivolous" lawsuit, and that its compliance program
was effective and consumers suffered no harm.
"The CFPB and its director entered into discussions with closed
minds and unfortunately chose to make increasingly unjustifiable
and unprecedented demands," the company said. "Ultimately,
MoneyGram refused to be strong-armed into an unfair settlement."
MoneyGram agreed in February to be acquired by private equity
firm Madison Dearborn Partners in a $1.8 billion transaction.
In afternoon trading, MoneyGram shares were down 49 cents, or
4.6%, at $10.16, after earlier falling to $9.76.
Thursday's lawsuit seeks unspecified refunds, restitution and
civil damages. It is the CFPB's fifth remittance-related case
since 2019.
"We will be looking to seek a broader set of remedies to halt
repeated law-breaking and disregard for the rule of law," Chopra
told reporters. "I am committed to stamping out misconduct by
firms that break the law over and over again."
The case is Consumer Financial Protection Bureau et al v
MoneyGram International Inc et al, U.S. District Court, Southern
District of New York, No. 22-03256.
(Reporting by Jonathan Stempel in New York and Katanga Johnson
in Washington, D.C.; Editing by Paul Simao and Andrea Ricci)
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