Consumer Banking and Payments Law: 6.2.6 Money Order Drawee’s Insolvency
If the money order issuer becomes insolvent, the payee may refuse to accept the money order. Meanwhile, the consumer has paid the issuer for the money order. The consumer will have to pay the payee again. Alternatively, the payee may accept the money order, not knowing of the issuer’s insolvency, but then demand payment from the consumer when the issuer is unable to honor the money order.