FinTech: MoneyGram pays $250,000 penalty for several consumer protection infractions

*New York City, in the United States, announces $250,000 settlement with MoneyGram for violating several Federal and state consumer protection regulations, urging the global money transfer company to ensure better service for customers of its financial products and services worldwide

Isola Moses | ConsumerConnect

New York Attorney-General Letitia James has announced a $250,000 settlement with MoneyGram International, Inc., and MoneyGram Payment Systems, Inc., to resolve allegations that the international money transfer company violated consumer protection laws and put customers’ financial transactions at risk.

ConsumerConnect gathered the latest settlement originated from a lawsuit filed against MoneyGram April 2022, by James and the Consumer Financial Protection Bureau (CFPB).

The lawsuit was instituted against the company for repeatedly failing to transfer funds on time, provide timely refunds, and properly investigate customer errors.

However, after the CFPB had withdrawn from the case, James has continued pursuing the matter independently.

James said: “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.

“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 behavior and will continue to protect those who rely on MoneyGram to support their families.”

MoneyGram operates as a non-bank financial services company that enables consumers to send remittances from the United States to over 200 countries and territories around the world.

The company maintains 440,000 locations globally and serves hundreds of thousands of New York customers annually through millions of transactions, agency report said.

It was learnt the Consumer Financial Protection Bureau had recently announced new rules to provide more guardrails for non-bank companies as MoneyGram, but President Donald Trump’s administration has derailed that effort, report stated.

According to the Attorney-General’s office, MoneyGram has violated Federal and state consumer protection laws for years by failing to make funds available to customers on time, quickly resolve transaction errors, or provide accurate information to consumers about their transfers.

Under the settlement terms, MoneyGram must comply with all relevant consumer protection laws, including ensuring timely fund transfers and refund processing.

Besides, the FinTech company is also required to provide accurate disclosures to consumers and investigate errors promptly.

The regulators also noted that MoneyGram is prohibited from giving customers inaccurate information about transactions, or falsely telling them they are not liable for errors.

Beyond the compliance requirements, MoneyGram must pay the $250,000 penalty to resolve the matter, report added.

MoneyGram in Nigeria

The company is also regarded as “a fast and reliable” way to send money to Nigeria from overseas, with various options for receiving it, including cash pick-up and direct bank deposit at bank branches and other retail locations in the country.

For direct bank deposit, money can be credited directly to the receiver’s account in any Naira account at a participating bank in the West African country.

Checks indicated that receivers could collect their money in Naira at various locations, including at several branches of Nigerian banks as GTBank, First Bank, Zenith Bank, Polaris Bank, Wema Bank, Access Bank, and UBA Plc.

Among other requirements for receiving are a reference PIN, the expected amount, and a valid form of identification (usually BVN) that are needed for cash pick-up.

MoneyGram also partners with several Nigerian banks to facilitate the transfers.

All MoneyGram transfers within Nigeria are made in Naira, a report noted.

Update on cybersecurity and consumer data issues

MoneyGram Payment Systems, Inc., in 2024, said it learned of a cybersecurity issue affecting certain of company’s systems.

It stated: “On September 27, 2024, we determined that an unauthorised third party accessed and acquired personal information of certain consumers between September 20 and 22, 2024.

“Our investigation into the issue is ongoing.”

According to the company, the breach of consumers’ information impacted data that included “certain affected consumer names, contact information (such as phone numbers, email and postal addresses), dates of birth, national identification numbers, copies of government-issued identification documents (such as driver’s licences), other identification documents (such as utility bills), bank account numbers, MoneyGram Plus Rewards numbers, transaction information (such as dates and amounts of transactions) and, for a limited number of consumers, criminal investigation information (such as fraud).

“The types of impacted information varied by affected individual.”

As regards corrective measures being taken to address the issue, MoneyGram said upon detecting the issue, we took steps to contain and remediate it, including proactively taking certain systems offline, which temporarily impacted the availability of our services. It noted: “We also launched an investigation with the assistance of leading external cybersecurity experts and have been coordinating with law enforcement.

“Our systems are back online and we have resumed normal business operations.”

The company as well urged consumers to “remain vigilant for incidents of fraud and identity theft by reviewing account statements.”

MoneyGram stated: “We also recommend that you remain alert for unsolicited communications involving your personal information.”

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