International money transfer company MoneyGram has harmed 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.
The lawsuit accuses MoneyGram of repeatedly flouting a variety of consumer protection laws and failing to correct problems identified by regulators. Consumer agency officials did not say specifically how many customers they believe have been harmed, but they pointed to MoneyGram’s broad reach: the company broadcasts about $100 billion a year to about 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,” Letitia James, the New York attorney general, said in a statement. “Companies have an obligation to be transparent with consumers, treat them fairly and follow 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 best-in-class compliance program with record anti-fraud numbers designed to protect consumers from harm,” he said.
Rohit Chopra, director of the consumer department, classified MoneyGram’s stock as part of a pattern of crimes. The company paid $18 million in 2009 to settle fraud charges filed by the Federal Trade Commission and paid $125 million in 2018 to settle charges that it had violated its previous agreement with the commission and a 2012 agreement with the Federal Trade Commission. of Justice about its anti-fraud policy. measures.
“I am committed to cracking down on misconduct by companies that repeatedly break the law,” 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 talks with the consumer department and set aside $7.5 million to cover the likely cost of a settlement. Bureau officials declined to comment Thursday on those conversations.
MoneyGram said Chopra and his employees “entered into discussions with closed minds and unfortunately chose to make increasingly unjustifiable and unprecedented demands.”
The lawsuit, filed in federal court in Manhattan, said MoneyGram unnecessarily delayed transactions, failed to make required fee refunds when it failed to complete a transfer on time, and failed to properly investigate and respond to complaints about remittance errors. Some of the delays related to MoneyGram’s process to screen transfers for signs of money laundering or other illegal acts, according to the lawsuit.
MoneyGram is being acquired by Madison Dearborn Partners, a Chicago-based private equity firm, for $1.8 billion in cash. With regulatory approvals pending, MoneyGram said it expects the deal to close by the end of the year.