CFPB, NY AG Sue ‘Repeat Offender’ MoneyGram as Company Vows Not to be ‘Strong-Armed’

Continuing to fulfill its commitment to going after repeat offenders, the Consumer Financial Protection Bureau — in partnership with the Attorney General of New York — yesterday announced a lawsuit against MoneyGram Payment Systems for “systematically and repeatedly violating” consumer protection laws by failing to deliver funds promptly and failing to train employees about how to resolve disputes.

MoneyGram paid $18 million back in 2009 to settle fraud charges levied by the Federal Trade Commission, and paid $125 million in 2018 for failing to implement measures intended to prevent those claims from occurring again.

“I am committed to stamping out misconduct by firms that break the law over and over again, including those that violate orders and those that ignore supervisory examination findings,” Rohit Chopra, the Director of the CFPB said in a statement. “When incidents of noncompliance are not mere mistakes, we understand that penalties and redress alone may not be adequate, and we will be looking to seek a broader set of remedies to halt repeated lawbreaking and disregard for the rule of law.”

MoneyGram defended itself in a statement and vowed to fight the lawsuit.

“The Bureau and NYAG know that MoneyGram has invested heavily in compliance,” the company said, according to a published report. “We have spent considerable time attempting to educate the CFPB about the Company’s robust and effective compliance efforts and the weakness of its case, including the complete absence of any consumer harm. Ultimately, MoneyGram refused to be strong-armed into an unfair settlement.”

In filing the lawsuit, the CFPB and the New York AG accused MoneyGram of violating the Remittance Rule, Regulation E, the Electronic Funds Transfer Act, and the Consumer Protection Act (CFPA). Along with accusing the company of not remitting funds to their recipients in a timely manner and failing to instruct employees about how to comply with laws regarding resolving disputes and failing to report the results of investigations to consumers, MoneyGram was also accused of failing to put proper policies and procedures in place to ensure compliance with money transferring laws, according to the suit.

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