Other schemes include notification of phony lottery winnings that require a deposit for tax purposes or payment to a third person, and people told they are being hired to visit stores to evaluate money transfer operations using a supplied check they deposit in their accounts. They are then instructed to send most of the funds back to test customer service. Later, when the bank discovers the deception, the victim must repay the entire amount of the fraudulent check.The FTC claimed MoneyGram was facilitating the transfers; they were easier to target than the individual scammers using the system, who often are out of country and virtually not subject to U.S. prosecution. MoneyGram countered that the company’s anti-fraud department - which has been doubled in size - has stopped numerous frauds and worked closely with authorities to stem scams.The FTC noted a survey found that over a four-month period in 2007, at least a whopping 79 percent of all MoneyGram transfers of $1,000 or more from the U.S. to Canada were fraud-related. The FTC’s complaint alleges that MoneyGram disregarded warnings from law enforcement officials, and even from its own employees, that the network - 180,000 agents with locations in close to 190 countries - was subject to widespread fraud.Aside from the fine, MoneyGram also agreed to strengthen its anti-fraud program, monitor its agents, and boost employee training in how to spot consumer fraud. The order also requires MoneyGram to provide an easily understood and highly visible warning of potential fraud on the front of all its money transfer forms.
MoneyGram settles FTC charges related to victims of scams
November 18, 2009
Santa Paula News
MoneyGram International Inc. has agreed to pay out more than $18 million to the Federal Trade Commission to settle charges it allowed its operation to be used by scam artists to defraud U.S. victims out of millions of dollars.
By Peggy KellySanta Paula TimesMoneyGram International Inc. has agreed to pay out more than $18 million to the Federal Trade Commission to settle charges it allowed its operation to be used by scam artists to defraud U.S. victims out of millions of dollars. Those who have been victimized by a scam artist who instructed them to use MoneyGram for the transaction can file a claim with the FTC, which is still working out details for verifying claims and crafting a schedule for payments to be configured on a pro rata basis.The FTC alleged MoneyGram knew its system was being used to defraud people, but didn’t do enough to prevent it, and in some cases MoneyGram agents participated in the scams. MoneyGram did not admit to any wrongdoing.The FTC stated that from 2004 and 2008, telemarketers and others using MoneyGram’s system persuaded about-to-be bilked consumers to wire them more than $84 million within the U.S. and to Canada. The actual amount could be much higher, as not all those who have been a victim of a scam report the crime.Recently a Santa Paulan reported she was defrauded by the “Grandma Scam,” where a person claiming to be a relative calls and says they are in trouble and need money as soon as possible. The woman said she was instructed to use a MoneyGram, which only requires a number identification to complete the recipient’s transaction, to wire the money to Canada. Once a transaction is made there is no way it can be reversed or the money traced, and the Santa Paula woman lost $8,000 to the scam.
