SETTLEMENT WITH MONEYGRAM
July 02, 2008
Anchorage, Alaska - Alaska Attorney General Talis Colberg announced
today that MoneyGram Payment Systems, Inc. has entered into an
Assurance of Voluntary Compliance with Alaska and 43 other states
and the District of Columbia, in response to concerns about the
use of the company's wire transfer services by fraudulent telemarketers.
Under the Assurance, MoneyGram will fund a $1.1 million national
consumer awareness program and include prominent consumer warnings
on the forms used by consumers to wire money.
MoneyGram, based in Minneapolis, offers money transfer services
by wire at over 25,000 locations in the United States and over
100,000 locations around the world, including grocery stores,
gas stations and other retail businesses.
The terms of the Assurance
are meant to address the problem of "fraud-induced transfers"--
money wired by consumers to fraudulent telemarketers and other
scam artists. A common example of a fraud-induced transfer is
the lottery scam. Scam artists convince vulnerable consumers
they have won a large sum of money in a lottery but must pay
taxes or other charges in order to claim the winnings. The victims
are directed to send the payment by wire, because wire transfers
are fast, there are transfer agents in most communities, and
funds can be picked up in multiple locations. But there are
no winnings and instead the victims are defrauded of the money
The problem of fraud-induced transfers is substantial. In 2003,
a survey conducted in seven states of transfers over $300 to
Canada by another major money transfer company estimated that
over 29 percent of those transfers were fraud-induced, resulting
in consumer losses in the year 2002 of approximately $113 million
Under the Assurance, MoneyGram will, among other things:
- Include warnings to consumers
of the dangers of fraud-induced wire transfers in English and
Spanish on the front page of MoneyGram's Send Form, and require
comparable warnings for telephone and Web transfers.
- Pay $1.1 million for a national
consumer education program on how to avoid fraud-induced transfers,
to be overseen by the AARP Foundation.
- Send prominent anti-fraud
messages to its agents electronically every month or whenever
a proposed transfer exceeds a certain amount, and revise its
anti-fraud training programs for its agents.
- 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.
- Ensure that money transfers
sent from the United States can only be picked up in the country
designated by the sender. This policy may be extended 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 problem in the future.
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