Western Union, MoneyGram Lawsuit Says Cos. Shared Money Transfer Data with Law Enforcement Group

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A proposed class action lawsuit alleges Western Union and MoneyGram have for years illegally swept up and disclosed to a law enforcement education group the personal transaction data of millions of unsuspecting consumers from certain states. 

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The 31-page lawsuit says that Western Union and MoneyGram, at the behest of the Arizona Attorney General and other state and federal actors, participated in a “massive and unlawful dragnet data collection scheme” targeting consumers who sent or received $500 or more between Arizona, California, New Mexico, Texas and Mexico. 

The complaint was filed in California federal court on February 21, more than a year after the American Civil Liberties Union (ACLU) publicly released a trove of documents that revealed Arizona had sent at least 140 “overbroad and illegal subpoenas” to money transfer companies, including Western Union and MoneyGram, to compel them to hand over certain consumer financial data. With this data, the state was able to amass a database to which more than 700 law enforcement agencies nationwide had—and continued to have—“unfettered access,” the complaint says. 

More specifically, the personal information swept up by Western Union and MoneyGram was shared with Transaction Record Analysis Center (TRAC), an Arizona nonprofit that works to educate law enforcement on “money laundering techniques and trends” and runs Arizona’s massive money-transfer database, the suit relays. 

According to the suit, the alleged data dragnet operation—and the creation of Arizona’s consumer transaction database—hinged on “facially improper” administrative subpoenas sent to Western Union and MoneyGram, among others, by the Arizona Attorney General, subpoenas the case claims “cast an impermissible breadth and depth.” The filing notes that in 2007, the Arizona Court of Appeals ruled that the state’s attorney general was inappropriately wielding these “invalid and illegal” subpoenas. 

The alleged data collection scheme also relied upon “facially improper” United States Immigration and Customs Enforcement, Homeland Security Investigations summonses, which HSI pulled back after Democratic Senator Ron Wyden publicly revealed this “utterly invasive surveillance sweep,” the case shares. 

According to the complaint, TRAC is not a governmental entity and was set up pursuant to a 2010 settlement between Western Union and Arizona in an anti-money laundering lawsuit filed by the state to fight cross-border drug trafficking. The putative class action summarizes that after Western Union and MoneyGram gave proposed class members’ data to TRAC, the nonprofit then brought in a database vendor, defendant Forcepoint, to “allow law enforcement agencies around the country unfettered access” to the information without a court order, warrant or subpoena. 

“Plaintiffs were unaware that their Protected Personal Information was being shared with third parties TRAC and Forcepoint, who were not disclosed as third parties that may have access to Plaintiffs’ Protected Personal Information,” the case charges. 

Though Western Union initially pushed back against the state on the enforcement of the subpoenas, with the Arizona Court of Appeals holding that the subpoenas were unenforceable as a matter of law, the state attorney general eventually sued Western Union under an Arizona anti-money laundering law, the lawsuit relays. To settle the case, Western Union in 2010 “agreed to voluntarily produce, on an ongoing basis, its consumers’ personal identifying information,” the complaint says. 

In 2014, the settlement between Arizona and Western Union was amended and expanded to include transaction data on all money sent to or from California, Arizona, New Mexico, Texas and Mexico until June 30, 2019, the suit shares. Additionally, Western Union was forced to pay hundreds of thousands of dollars to “establish and monetarily supplement” TRAC, which would house all the data it sent pursuant to the settlement, the complaint says. 

With regard to defendant Forcepoint, the case relays that the vendor’s system is “designed to allow law enforcement agencies to circumvent ordinary constitutional protections” since the system contains data more relevant than what would be obtained through the standard subpoena process. 

“In sum, TRAC, in association with Forcepoint, uses Protected Personal Information to create a database-to-software interface that operates much like a Google search: type in your relevant facts and return hits from consumers’ Protected Personal Information at the click of a button—no need to bother with the ‘lengthy delays in the usual subpoena process.’” 

Once Western Union’s settlement with the Arizona Attorney General ended in June 2019, Homeland Security Investigations began to issue customs summonses to the company to transmit and disclose protected personal information directly to TRAC, the lawsuit goes on. It was around this time, 2019, that MoneyGram began to regularly receive subpoenas from the Arizona Attorney General seeking data on money transfers, according to the suit. 

The case alleges Western Union and MoneyGram continue to improperly disclose money transfer customers’ personal information to Forcepoint, thus granting access to the data to law enforcement agencies. 

The lawsuit looks to cover all California residents who used the services of Western Union or MoneyGram, or their subsidiaries or affiliates, and had their information sent to TRAC and/or Forcepoint. 

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