Despite the Consumer Financial Protection Bureau (CFPB) dropping out of its lawsuit against MoneyGram, the international remittance company has still faced repercussions.
MoneyGram has settled its three-year legal battle with the New York State Office of the Attorney General (OAG), agreeing to pay a $250,000 penalty.
Originally filed in April 2022, the settlement concludes a lengthy dispute in which MoneyGram was accused of violating state and federal laws by failing to make funds available to customers on time, quickly resolve errors and provide accurate information.
“New Yorkers who want to send funds to their loved ones abroad should be able to trust that the companies handling their hard-earned money are operating honestly,” said New York Attorney General Letitia James.
“MoneyGram failed to follow the law for years, sometimes leaving its customers in the dark about where their money went. My office stopped MoneyGram’s illegal behaviour and will continue to protect those who rely on MoneyGram to support their families.”
CFPB withdraws
According to Reuters, the CFPB withdrew from the case in April, continuing a trend of the agency dropping lawsuits since President Donald Trump’s inauguration in January.
Other high-profile cases recently dropped by the CFPB include Capital One and Zelle. The lawsuit against Zelle targeted Bank of America, Wells Fargo and JP Morgan, alleging fraud had been allowed to “fester” on the platform, costing Americans millions.
Similarly to the Zelle case, MoneyGram’s lawsuit was launched during President Joe Biden’s administration. The CFPB has been vocal about its belief that the agency was too strict, suggesting many lawsuits were unnecessary.
However, in recent months, the agency’s enforcement arm has appeared increasingly fragile. On June 11, CFPB’s top enforcement official, Cara Petersen, resigned, criticising the agency’s direction in an internal email.
“I have served under every director and acting director in the bureau’s history and never before have I seen the ability to perform our core mission so under attack,” Petersen wrote.
She described the agency’s dismantling, citing staff reductions, inexplicable case dismissals and terminated settlement agreements that let “wrongdoers off the hook.”
OAG ensures accountability
Despite the CFPB’s withdrawal, OAG ensured MoneyGram was held accountable. The settlement requires MoneyGram to comply with consumer protection laws by transferring funds and processing refunds on time.
Additionally, it also requires MoneyGram to ensure disclosures to consumers are accurate and to investigate errors in a timely fashion.
“The settlement with OAG ensures that MoneyGram does not escape accountability for its illegal actions impacting New Yorkers, despite the CFPB’s decision to withdraw from the lawsuit,” an OAG statement read.
Payment Expert has approached MoneyGram for comment.
