MoneyGram Sued By U.S., New York For Unfair Remittance Transfers

MoneyGram International Inc was sued on Thursday by two regulators that said it repeatedly and unfairly violated a federal rule designed to make it easier for people to send money to friends and family outside the United States.

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.