Texas and Arkansas are leading a coalition of 21 states in suing Delaware at the U.S. Supreme Court. The group is aiming to recover more than $150 million in uncashed checks issued by Dallas-based MoneyGram.
The lawsuit charges Delaware with violating the Federal Disposition Act. Under that law, unclaimed money orders or traveler’s checks revert to the state in which they were purchased. “And so if you purchased it in Texas or Pennsylvania, that state under that law should be entitled to the money when no one comes to collect it,” says Jim Hawkins, an associate professor at the University of Houston Law Center.
While MoneyGram has its physical headquarters in Dallas, it’s incorporated in Delaware. The suit alleges MoneyGram has been handing over the unclaimed funds to Delaware, following a directive by that state.
“Delaware believes that the checks that MoneyGram issues are third-party checks. They’re not traveler’s checks or money orders, so they’re not subject to the act,” Hawkins says.
In a prepared statement, Texas Attorney General Ken Paxton said, “We are committed to get this money for unclaimed MoneyGram checks reverted to the states, claiming what rightfully belongs to our taxpayers.”
Paxton said Delaware could owe Texas more than $10 million.
