The CFPB and the New York Attorney General have filed a lawsuit in a New York federal district court against MoneyGram International, Inc. and MoneyGram Payment Systems, Inc. (MoneyGram) in which they allege that MoneyGram violated the Remittance Transfer Rule (Remittance Rule), other provisions of Regulation E, the CFPA, and New York Executive Law.

In his prepared remarks, Director Chopra characterized the lawsuit as an illustration of the CFPB’s “strong focus on corporate repeat offenders.”  The action follows by only a few weeks the CFPB’s lawsuit against TransUnion, which the CFPB also labeled a “repeat offender.”  Director Chopra reaffirmed his “commit[ment] 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.”  He also repeated his prior warnings that “[w]hen incidents of noncompliance are not mere mistakes…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.”

Even more significantly, Director Chopra’s remarks are intended to send a warning to all CFPB targets, whether or not “repeat offenders.”  He indicated that the CFPB is “deepening [its] law enforcement cooperation with state attorneys general and state financial regulators.”  He also stated that “[t]o the extent permissible by law, I have authorized information sharing with MoneyGram’s state authorities to facilitate parallel actions.”  Without offering any specifics, he warned that “[t]he CFPB is already expanding its efforts to ensure states can prosecute consumer financial protection abuses.”

The complaint alleges:

  • Initial CFPB exams of MoneyGram conducted between 2014 and 2016 resulted in the CFPB’s issuance of 12 Matters Requiring Attention (MRAs).
  • In 2019, a follow up exam resulted in the CFPB notifying MoneyGram that their compliance program remained deficient, that they had failed to satisfy 8 of the 12 MRAs, and had failed to demonstrate that they were in compliance with the Remittance Rule, which became effective in October 2013.
  • From October 2013 until at least early 2022, MoneyGram repeatedly violated the Remittance Rule by failing to provide accurate funds availability dates and timely refunds and failing to comply with the Rule’s error resolution procedures.
  • MoneyGram failed to develop and maintain appropriate policies and procedures regarding the retention of error-related documentation as required by the Remittance Rule or to maintain evidence of EFTA/Regulation E compliance  for at least two years as required by Regulation E.

In addition to alleging violations of the Remittance Rule and Regulation E, the complaint alleges that such violations constitute violations of the CFPA provision that prohibits covered persons from engaging in violations of  Federal consumer financial law.  It also alleges that MoneyGram’s failure to make remittance transfers and refunds available on a timely basis was an unfair act or practice in violation of the CFPA’s UDAAP prohibition.  (The Remittance Rule/Regulation E claims are asserted only by the CFPB and the CFPA claims are asserted jointly by the CFPA and NY AG.)  The complaint also includes a claim brought only by the NY AG under a provision of the NY Executive Law that authorizes the NY AG to bring an action to enjoin “repeated illegal acts or persistent illegality, in the carrying on, conducting, or transaction of business, including violations of federal law.”