(Reuters) – MoneyGram International Inc. was sued on Thursday by two regulators who said they repeatedly and unfairly violated a federal rule designed to make it easier for people to send money to friends and family outside the United States.
The lawsuit against MoneyGram, one of the largest U.S. providers of remittances, was filed in Manhattan’s federal court by the U.S. Consumer Financial Protection Bureau and New York Attorney General Letitia James.
Transfers allow people in the United States to send money electronically to people in other countries and exceed $ 100 billion annually.
MoneyGram was accused of repeatedly having “stranded” recipients waiting for their money, giving senders incorrect information about when transfers were to be completed and failing to deal with customer complaints in accordance with the 2013 rule.
The problems persist despite a series of software and technology updates, with some transactions still “stuck” in MoneyGram’s system, the complaint said.
“MoneyGram spent years betraying its customers and failing to comply with the law, ignoring customer complaints and state warnings in the process,” CFPB Director Rohit Chopra said in a statement. “MoneyGram’s long pattern of misconduct must be stopped.”
In a statement, Dallas-based MoneyGram said it plans to defend itself against the “frivolous” lawsuit and that its compliance program was effective and that consumers were not harmed.
“CFPB and its director began discussions with closed minds and unfortunately chose to make increasingly unjustifiable and unprecedented demands,” the company said. “In the end, MoneyGram refused to be heavily armed into an unfair deal.”
In February, MoneyGram agreed to be acquired by private equity firm Madison Dearborn Partners in a $ 1.8 billion transaction.
Thursday’s trial demands unspecified repayment, repayment and civil damages.