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MoneyGram Scam?

MoneyGram Scam? Federal and State Agencies Sue the Money-delivery Service » Features » MoneyGram Scam? Federal and State Agencies Sue the Money-delivery Service



MoneyGram’s website says its money-transfer service is “fast, simple, reliable.” The federal government and New York’s attorney general are disputing two of those claims in court.

The Consumer Financial Protection Bureau (CFPB) and the New York attorney general say MoneyGram’s service might be simple, but it’s neither fast nor reliable. In a lawsuit filed in April, the CFPB says, “the company stranded customers waiting for their money when it failed to deliver funds promptly to recipients abroad.” [1]

MoneyGram denies these accusations, but they’ve already paid millions for failing their customers in the past. Since their customer-base is made up mostly of immigrants, MoneyGram is hurting an already vulnerable population.

Immigrant workers often rely on MoneyGram to send funds back home. Serving at least 200 countries and territories, it acts as an economic bridge between the nation’s immigrant population and their families. So, when money goes missing into the MoneyGram ether, families back in immigrant’s home countries struggle to pay for necessities.

Understanding the MoneyGram scam

The Consumer Financial Protection Bureau (CFPB) and York Attorney General Letitia James filed the lawsuit on April 21. The CFPB has the authority to act against companies and people that violate federal consumer financial laws, such as the Dodd-Frank Wall Street Reform and the Consumer Protection Act of 2010 (CFPA). The CFPB and New York Attorney General Letitia James allege that MoneyGram:

  • Left its customers stranded waiting for money. Customers used MoneyGram to transmit money as quickly as possible. However, MoneyGram failed to do so and held up funds instead. This holding resulted in delays and affected people relying on those transfers to pay their living expenses. They also repeatedly failed to accurately inform customers how long before their funds would be available to recipients.
  • Failed with their instructions to employees about how to resolve disputes. They did not properly instruct or direct their employees on complying with laws for resolving disputes. They also failed to report the result of their error investigations to consumers and did not provide a written explanation of the findings to consumers.
  • Neglected to develop policies and procedures designed to ensure compliance with money-transferring laws. They were also required to keep evidence of their compliance with error resolutions, which they failed to do.

What is MoneyGram?

MoneyGram is one of the world’s largest money order and electronic payment processors. It offers online and in-person money transfers domestically and internationally. MoneyGram can also act as a middleman for making bill payments and similar services.

The company started in Minneapolis as Travelers Express Co., Inc. in 1940. By 1998, the company’s parent Viad Corp. bought international money transfer company MoneyGram Payments Systems, Inc. They banded the two companies together and formed MoneyGram.

How does MoneyGram work?

MoneyGram allows you to send money to a mobile wallet, like PayPal, or a bank account in select countries. You can use MoneyGram’s service by making an online transfer or by visiting one of their branches.

Either way, to send or receive money through MoneyGram you’ll need to provide a government-issued ID, bank information, and some additional information depending on the circumstance.

What’s really happening with MoneyGram?

The digital platform is supposed to follow numerous consumer financial protection laws, but according to the CFPB, they aren’t.

One law that MoneyGram has allegedly struggled to follow is the 2013 Remittance Rule. A remittance in this case is a transfer of money from an individual in the U.S. to someone in a foreign country. The 2013 law aimed to make the process more transparent and to lessen the risk for consumers.

The Remittance Rule requires services like MoneyGram to…

  • Disclose taxes and fees to users before they make a transfer.
  • Give consumers at least 30 minutes to cancel a transaction.
  • Investigate any issues that consumers report.

Investigators say that MoneyGram hasn’t followed all these rules.

The CFPB found multiple issues when the bureau began its MoneyGram investigations between 2014 and 2016. MoneyGram agreed to solve the issues the CFPB found.

For over five years the CFPB worked with MoneyGram to fully comply with the law, yet MoneyGram continually failed to do so.

Despite its failures, on February 15, 2022, MoneyGram announced a pending sale for $1.8 billion to Madison Dearborn Partners, LLC, a Chicago-based private equity firm.

Is MoneyGram a scam?

This is not MoneyGram’s first time in the hot seat. In 2009, they agreed to pay $18 million to settle fraud charges brought by the Federal Trade Commission. They were also ordered to implement an anti-fraud and agent-monitoring program. By 2018, they needed to pay $125 million to settle allegations for failing to implement that order.

MoneyGram agreed to pay $100 million in 2012 and enter into a deferred prosecution agreement with the Department of Justice. MoneyGram admitted to criminally aiding wire fraud and failing to maintain an effective anti-money laundering program. They would also go on to violate that agreement.

What experts say

The legal experts prosecuting MoneyGram’s case are adamant that MoneyGram has been hurting its customers and failing to solve the problem.

CFPB Director Rohit Chopra stated, “MoneyGram spent years failing its customers and failing to follow the law, ignoring customer complaints and government warnings in the process. MoneyGram’s long pattern of misconduct must be halted.”

Attorney General Letitia James called out MoneyGram for how its practices have affected immigrant families.

“Our immigrant communities trusted MoneyGram to send their hard-earned money back home to loved ones but MoneyGram let them down,” James said. “Consumers deserve to know where their money went. Businesses have an obligation to be transparent with consumers, treat them fairly, and follow the law, but MoneyGram repeatedly failed to do so.”

What users say

MoneyGram has a 3.7 rating on the Consumer Affairs website, and they have a 4.4 rating on Trustpilot. However, after sifting through consumer reviews, we found their terms of service and customer service left a bitter taste in people’s mouths.

Consumer Affairs customer reviews:

“They should be reported as scam business! I sent some money to my daughter in Turkey, but she was never able to receive it over there! Every time she goes to their offices, they say “there is an error.” I tried to cancel the transaction online on the app, but it didn’t work! It says: “error!” I called them and asked them to cancel it and they said they cannot do that! They have kept my money, neither let my daughter receive it, nor transfer it back to me! I have disputed the transaction through my bank and still waiting!” says Maryam (March 23, 2022).

“I sent money to my family in Turkey in May and my recipient still did not get it. Today is the 9th of June and MoneyGram cannot tell me where the money is. When I called them, all they told me was, “Wait and we will investigate.” They are the worst company to work with. Never use them if you want to send money abroad,” says Bilge (June 9, 2022).

Trustpilot customer reviews:

“My sender made a payment from USA to Pakistan into my bank. Transaction status is showing that the money has been sent to your receiver account, but I haven’t got the payment yet. Also, it’s showing from my sender’s side. Don’t know where the money is gone? It’s been 7 days but no anyone is replying from customer service,” says Asad Ali (May 24, 2022).

“I’ve been using MoneyGram for years to send money to the Caribbean every few months (£100 max per transaction) and all of a sudden their system flags my account as fraudulent. The worse thing is they’ve got no way of telling you why your account has been closed as it’s purely down to the system to make that decision, what a load of foolery. Don’t use them, find an alternative method to send your money,” Vincy (May 3, 2022).

Using money transfer services without getting scammed

Money transfer services make it easy to move money, but unfortunately, whenever there’s a financial product designed to help people in vulnerable financial situations, scammers are nearby and waiting for the opportunity to pounce. That’s why it’s important to research before signing up or using any service.

4 options to legally send money outside the U.S.

Since it’s pretty common to send money through mobile apps, many people don’t bother to read the fine print for these services.

However, you should always keep your guard up and check how reputable a company is before signing up with them.

If you are trying to send cash abroad, here are four trustworthy apps:

Western Union: Founded in 1851, Western Union is one of the most common money transfer services. They have about 500,000 locations in over 200 countries. You can send money as an individual or as a business. However, they charge an additional fee for transfers.

Xoom: Not to be confused with the online meeting service, Zoom, Xoom is a part of PayPal. They are currently present in 57 countries. It is one of the quickest money transfer apps around. Money is typically ready for use the same day or the next day. However, they have higher additional charges for transfers compared to their competitors.

Wise: Formerly known as TransferWise, Wise is an online-only platform. They currently provide their service to 58 countries. Wise also lets you simulate transfers. You choose the currency, the amount, and the currency to exchange, and Wise will provide the best available rates.

Remitly: Formed in 2011, Remitly has some of the lowest fees in the market and they provide their services to 135 countries. If you send $500 or more, you may not face additional fees depending on the country. For example, sending less than $500 to Mexico results in a $3.99 fee. They also promise that if your money is not sent in the specified time, it will get returned.

What should I do if I have issues with a money transfer?

Prior to using any money transfer apps, make sure to carefully read the terms and conditions. Also, check online for reviews or ask for referrals from friends and family. Ideally, you want to work with a company that works with you to resolve money transfer issues.

So, if you have issues with a transfer, follow these steps to resolve them:

  1. Start by double-checking the sender and recipient information. Errors can happen. It is possible there was a mistake made by you or the person on the other end of the transfer. So, make sure to check everything entered for the transfer follow the transfer steps closely.
  2. Contact the company’s customer service department. Every company should have a phone number for you to contact. If they don’t, consider that a red flag. Many companies also offer live chats with customer service representatives online. Follow the representative’s step-by-step advice and jot down their name, and the date and time of the conversation.
  3. If the company doesn’t have an answer, check in with your bank. Sometimes banks withhold money to confirm the origin, or they simply may not allow international transfers.
  4. File a complaint with the CFPB. The CFPB may already have investigations against the company and your input could help the case. Include any evidence and be as detailed as possible when explaining your issues and concerns.


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