MoneyGram Payment Services has agreed to a multi-state agreement intended to help prevent U.S. residents from becoming victims of wire transfer scams.
MoneyGram will pay $1.1 million to fund a national peer-counseling program to be overseen by the AARP Foundation. The company also agreed to print an attention-grabbing warning on its form used to send money and provide enhanced training to branch agents.
Attorneys general in 44 states and the District of Columbia reached the out-of-court agreement with MoneyGram on July 2, 2008. The case was initiated because 10 states had concerns about the use of MoneyGram’s wire transfer services by scammers. The states reached a similar agreement in 2005 with Western Union.
Con artists prefer wire transfers because they are fast, there are transfer agents in most communities, and funds can be picked up in multiple locations.
Consumers have been tricked by fake employment ads, bogus loan offers, sham foreign lotteries, and schemers who pretend to be interesting in buying or selling something from you. In most cases, the victim is sent a counterfeit check and told to keep a portion of the money and wire the rest. The check ultimately bounces, sometimes weeks after the funds initially appeared in the victim’s account. Victims who have already wired or spent the money are sometimes hit with overdraft fees and seldom recover what they lost.
A survey by seven states found that telemarketing fraud was a factor in more than 29 percent of Western Union transfers in excess of $300 that were sent from the U.S. to Canada in 2002. In addition, fraud-induced transfers represented 58 percent of the total dollars wired during the survey period. The states projected that consumers nationwide lost an estimated $113 million because of these scams.
Under the agreement, MoneyGram will:
- Continue its policy of allowing consumers to cancel pending wire transfers from any outlet – not just the location where they initiated the transfer – or by calling 1-800-MONEYGRAM when there is reasonable belief that the transfer was fraud-induced. A customer who initiates a transfer through MoneyGram’s Web site can cancel the transaction by calling 1-800-922-7146. In addition, the company will refund the consumer for any service fees.
- Ensure that money transfers sent from the United States can only be picked up in the country designated by the sender. The policy may potentially be modified to limit pick-ups in specific states or provinces, if needed.
- Circulate monthly anti-fraud e-mails to MoneyGram outlets. A company software program will also generate messages anytime an agent in the U.S. attempts a transaction that exceeds $500.
- Create new training materials for its agents to more strongly address the issue of fraud-induced transfers and provide enhanced training to personnel who work at locations known to have a high level of fraud-induced transfers.
- Block transfers from specific consumers or to specific recipients when the company receives information from a state that there is reason to believe that fraud will occur, until such time as the consumer is counseled on fraud and requests resumption of the transfer.
- Increase the number of anti-fraud staff and, if possible, improve its computer system to spot suspected fraud-induced transfers before they are completed.
- Provide the states with information about consumer fraud complaints.
- Pay $150,000 in attorneys’ fees and costs, to be shared among the states that negotiated the agreement: Arkansas, Illinois, Massachusetts, New Jersey, North Carolina, Ohio, Texas, Vermont, and Washington.
MoneyGram offers wire transfer services at more than 125,000 locations in the U.S. and an additional 100,000 worldwide. Its agents are independent contractors.
The following states participated in the agreement: Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wyoming and the District of Columbia.