Director Chopra’s Prepared Remarks on the Lawsuit Against MoneyGram


Millions of individuals from around the world sacrifice proximity to their loved ones to seek a better life and financial stability in our country. But they know that on the other side, when their money transfers are received, they are supporting elderly parents, siblings, spouses, and sometimes their own young children. Each year, American families send more than $100 billion abroad using international money transfers, also known as remittances.

After widespread concerns about the remittance market, Congress amended the Electronic Fund Transfer Act in 2010 to make transferring money overseas more transparent and less risky. In 2013, the CFPB’s Remittance Rule codified these protections with requirements like disclosures, cancellation and refund rights, error resolutions, and record retention obligations. In other words, there were finally basic consumer protections for remittance users, similar to what you would see in the debit and credit card markets.

But some bad actors are ignoring the laws of the United States of America.

As one of the largest remittance providers in the U.S., MoneyGram was well aware it needed to update its practices to comply with the new law. This publicly traded company, which had more than $1.2 billion in revenue last year, knew it had to clean up its act. We expect MoneyGram’s leadership, and the sophisticated financial firms backing it, knew it too.

Today, the Consumer Financial Protection Bureau along with the New York Attorney General is suing MoneyGram because it has not been following the law despite repeated warnings. For years, MoneyGram has been leaving families high and dry while they wait for their money.

The lawsuit alleges that MoneyGram illegally held up funds, leaving its customers stranded when their money didn’t arrive on time. It also says MoneyGram botched instructions to its employees on how to resolve disputes. Mismanagement, including lax company policies and procedures, supported this chaos.

Between 2014 and 2016, before our formal law enforcement investigation began, the CFPB conducted supervisory examinations of MoneyGram. These exams found serious deficiencies with the company’s compliance with consumer protection laws, including the failure to promptly release remittance transfers that had been cleared by their internal screening process. Rather than imposing penalties, the CFPB gave MoneyGram an opportunity to correct the problems and provided a list of twelve specific areas requiring management’s attention. This is a common practice in order to give companies a chance to make things right.

In 2019, the CFPB conducted a follow-up exam of MoneyGram. Usually, when the CFPB conducts these follow-ups it finds that companies cleaned up their problems. But in this case, the CFPB found that MoneyGram ignored previous promises and continued to violate the law—evidently placing profit ahead of its legal obligations.

This isn’t the first time MoneyGram has been in trouble with the law. Sadly, nor is it the second. MoneyGram is a repeat offender that violates formal law enforcement orders. In 2009, the company agreed to pay $18 million to settle fraud charges brought by the Federal Trade Commission, and was required to implement a comprehensive anti-fraud and agent-monitoring program. MoneyGram failed to do it. In 2018, the FTC resolved the repeat offenses for $125 million. But it’s not just civil law enforcement.

MoneyGram was involved in consumer fraud schemes perpetrated by corrupt MoneyGram agents and others. In 2012, MoneyGram agreed to forfeit $100 million and enter into a deferred prosecution agreement with the Department of Justice, admitting it criminally aided and abetted wire fraud and failed to maintain an effective anti-money laundering program. But it also violated that agreement, leading to more sanctions. MoneyGram’s checkered record also includes a slew of other serious misconduct.

Today’s lawsuit against MoneyGram highlights several areas of interest for the CFPB:

First, we are putting a strong focus on corporate repeat offenders. While most of the companies under our jurisdiction make good faith efforts to comply with federal consumer protection laws, 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. 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.

Second, we are deepening our law enforcement cooperation with state attorneys general and state financial regulators. I am pleased that we are prosecuting this action with New York Attorney General Letitia James, since so many New Yorkers send funds through MoneyGram to loved ones overseas. To the extent permissible by law, I have authorized information sharing with MoneyGram’s state authorities to facilitate parallel actions. The CFPB is already expanding its efforts to ensure states can prosecute consumer financial protection abuses.

Finally, the CFPB is concerned about broader problems in payments and international money transfer markets. Specifically, we believe there is significant noncompliance of the Remittance Rule by nonbanks, and we intend to protect both remittance users and the law-abiding companies that are disadvantaged by those cutting corners. Indeed, since the rule went into effect in 2013, we continue to see a lack of transparency about fees, exchange rates, and taxes which comprise the true cost to consumers of sending money abroad. And we are still seeing severe problems when consumers try to either get to the bottom of errors or get refunded. Today’s remittance market is ripe for reinvention, and the CFPB will be examining ways to increase competition and innovation for the benefit of both families and honest businesses, while also avoiding creating a new set of harms.

Thank you.

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