A proposed class action filed yesterday in federal district court in Los Angeles alleges that international money transfer providers Western Union and MoneyGram have unlawfully breached the protected personal information of possibly millions of consumers during the past decade.

According to the lawsuit filed by attorneys with Burns Charest LLP and the Kick Law Firm, the companies provide personal information to hundreds of law enforcement agencies, bypassing the typical legal requirements such as court orders, subpoenas, or warrants, and done without the knowledge and consent of the individuals using the services.

Building on documents released last year by the American Civil Liberties Union, the filing outlines a “massive and unlawful dragnet data collection scheme” in which the information is sent by the companies to the Transaction Record Analysis Center or TRAC, an Arizona non-profit corporation whose tax filings indicate its stated mission is: “[t]o educate law enforcement and industry to money laundering technique and trends.”

The lawsuit states that TRAC uses its vendor, Austin-based Forcepoint, to provide the data to an estimated 700 law enforcement agencies nationwide, including the Department of Homeland Security and its Immigration and Customs Enforcement agency. The data primarily consists of money transfer records for transactions exceeding $500 sent to or from Arizona, California, New Mexico and Texas, as well as to or from Mexico.

As an example, published reports by the ACLU reveal that from 2014 to 2021, Arizona attorneys general issued at least 140 administrative subpoenas to money transfer companies, each requesting that the companies periodically provide customer transaction records for the next year. This practice apparently continues despite policies and court rulings that prohibit this unfettered access.

The information allegedly collected by the companies and made available to law enforcement includes the name, full address, government identification number, phone number, date of birth, occupation, and other identifying information for both the sender and receiver.

The lawsuit alleges the two money transfer providers, together with Forcepoint and TRAC, are violating the California Consumer Privacy Rights Act and the California constitutional right to privacy.

“It is unconscionable that these companies are caving to governmental pressure and knowingly providing this information in violation of the law and their own policies,” says Chase Hilton of Burns Charest, who filed the lawsuit with co-counsel Taras Kick of the Kick Law Firm. The three plaintiffs named in the claim are all California residents who sent funds using the services of one or more of the defendants.

According to the filing, the market for money transfers was estimated to reach $656 billion in 2023, up from $647 billion in 2022. The United States is one of the largest remitters and, notably, Mexico received the second highest level of remittances in 2022.

The lawsuit is Cruz, et al. v. The Western Union Company et al., Cause No. 5:24-cv-404, filed in the United States District Court for the Central District of California in Los Angeles.

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