MoneyGram settlement to help fight wire transfer fraud

According to a news release from Attorney General Jay Nixon, 44 states, including Missouri, and the District of Columbia, are parties in an agreement that was reached in response to concerns about the use of MoneyGram’s wire transfer services by fraudulent telemarketers.

At issue in the settlement was the high number of “fraud-induced transfers,” or money wired by consumers to fraudulent telemarketers and other scam artists, the release said.

For example, some telemarketers – often based in other countries – use a lottery scam in which they tell consumers they have won large sums of money but must wire money to pay taxes or other charges in order to claim their winnings.

Under the agreement, filed in Cole County Circuit Court, MoneyGram has agreed to:

• pay $1.1 million for a national consumer education program, to be overseen by the AARP Foundation, on how to avoid fraud-induced transfers;

• post prominent warnings to consumers in both English and Spanish on the front page of the front of its MoneyGram send form, with comparable warnings for telephone and Web transfers;

• continue its current policy of reimbursing any amount of a transfer to a consumer who requests that the transfer be stopped prior to pickup, as well as reimbursing transfer fees when consumers reasonably claim that a transfer was fraud-induced;

• send prominent anti-fraud messages to its agents electronically every month or whenever a proposed transfer exceeds a certain amount, revise and enhance the company’s agent anti-fraud training programs and provide special training to agents with elevated fraud levels at their locations;

• take appropriate action to suspend or terminate agent locations that are involved in fraud or that do not take reasonable steps to reduce fraud;

• block wire transfers from specific consumers or to specific recipients when the company receives information from a state that there are good faith grounds to believe that fraud will occur, until such time as the consumer is counseled on fraud and requests resumption of the transfer; and

• ensure that money transfers sent from the United States can only be picked up in a country designated by the sender, with a potential extension of this policy to the state or provincial level if the pickup of fraud-induced transfers in states or provinces to which consumers do not intend to send money becomes a significant future problem.

“To keep perpetrators from defrauding consumers, we need to make it harder for them to utilize traditional methods of transferring money,” Nixon said in the release. “Agreements such as this one with MoneyGram – with its model fraud warning, consumer education program, and enhanced training for money transfer agents – are steps in the right direction.”

In 2005, Nixon and 46 other attorneys general reached a similar agreement with Western Union Financial Services.