In a recent development, Judge Katherine Polk Failla from the U.S. District Court for the Southern District of New York approved a final judgment resolving claims initiated by the New York Attorney General against a prominent global money transmitter. Initially, this lawsuit was jointly filed with the CFPB and focused on alleged violations of the EFTA and CFPA. Following the CFPB's withdrawal, the case proceeded under New York state law. The resolution mandates the company to upgrade its compliance systems, provide enhanced employee training, and ensure adherence to federal regulations. Additionally, it must furnish compliance documentation to the New York Attorney General upon request over three years.

This outcome underscores a shift in regulatory enforcement dynamics, where state authorities are increasingly assuming leadership roles in consumer protection efforts as federal agencies like the CFPB scale back their involvement in longstanding enforcement actions. Despite reduced federal activity, state regulators remain vigilant and assertive in safeguarding consumer rights.

Regulatory Failures and Legal Allegations

The allegations against the company centered around multiple regulatory failures. These included inaccurate availability disclosures regarding fund transfers, subpar error resolution processes, noncompliant internal procedures, and engaging in unfair business practices that deprived consumers of timely access to their funds. Each failure was scrutinized under both federal and state laws, highlighting the comprehensive nature of the investigation.

Specifically, the company was accused of failing to disclose accurate dates for fund availability as required by the Remittance Rule. It also neglected prompt investigations into consumer complaints, mandatory fee refunds, and necessary explanations within set timeframes. Internal procedures were deemed insufficient, lacking written policies to identify errors, conduct timely probes, and retain essential compliance records. Furthermore, the company allegedly engaged in practices that unnecessarily delayed remittances and refunds post-internal screenings, significantly impacting consumer access to their funds.

Shift in Regulatory Enforcement Dynamics

The stipulated final judgment marks a significant change in how consumer protection is enforced, particularly highlighting the increasing role of state regulators. As the CFPB retreats from legacy enforcement actions, state authorities such as the New York Attorney General step forward to champion consumer rights. This transition reflects broader trends in regulatory oversight, emphasizing the importance of state-level initiatives in maintaining robust consumer protections.

Under the terms of the judgment, the company must implement substantial improvements in its compliance-management systems and enhance employee training programs to align with federal standards. For the next three years, it is obligated to supply compliance documentation upon request to the New York Attorney General. This case exemplifies the evolving landscape of consumer protection enforcement, where state regulators continue to demonstrate active and aggressive approaches despite diminished federal engagement. Consequently, companies operating in the financial services sector must be prepared to meet heightened scrutiny and stringent compliance requirements at both state and federal levels.