MoneyGram Settles New York Lawsuit Alleging Slow Money Transfers

MoneyGram will pay a penalty of $250,000 as part of a settlement with the New York State Office of the Attorney General (OAG), resolving a three-year-old lawsuit.

The OAG and the U.S. Consumer Financial Protection Bureau (CFPB) filed the suit in April 2022, alleging that the international money transfer provider violated state and federal laws by failing to make funds available to its customers on time, quickly resolve errors or provide accurate information to customers, the OAG said in a Monday (June 16) press release.

The CFPB withdrew from the case in April, Reuters reported Monday.

Under the settlement with the OAG, MoneyGram is required to transfer funds and process refunds on time, ensure that its disclosures to consumers are accurate, and investigate errors in a timely fashion, in addition to paying the penalty, the OAG’s release said.

“MoneyGram failed to follow the law for years, sometimes leaving its customers in the dark about where their money went,” New York Attorney General Letitia James said in the release. “My office stopped MoneyGram’s illegal behavior and will continue to protect those who rely on MoneyGram to support their families.”

In a statement provided by PYMNTS, MoneyGram General Counsel Cory Feinberg said the company is pleased to resolve the case.

“We are pleased to bring full closure to this legacy matter, which dates back years and involved no harm to consumers,” Feinberg said. “Over the past decade, MoneyGram has invested more than $800 million to build and enhance a best-in-class program and team, and the company is proud to operate one of the most robust, data-driven compliance and consumer protection programs in the industry.”

When the OAG and the CFPB filed their lawsuit against MoneyGram in April 2022, they alleged the company frequently violated the Remittance Rule, a measure Congress passed in 2010 with the expressed intent to make money transfers more transparent and less risky than they had been.

MoneyGram said at the time that it was “deeply disappointed” both the CFPB and the OAG filed a “meritless lawsuit” and further that the CFPB issued press releases with “inaccurate statements” about MoneyGram and the case.

In May 2023, MoneyGram said it received the final regulatory approval needed for its sale to Madison Dearborn Partners.