MoneyGram undertakes to pay $ 125 million for not having repressed the fraudulent transfers of money

MoneyGram International has agreed to pay a fine of $ 125 million to resolve allegations from the Federal Trade Commission and the Department of Justice that the company has not done enough to prevent fraudulent transfers of money.

Under an agreement with the Federal Trade Commission, the company said it would take steps to crack down on scammers who got victims to bind their money into schemes that often targeted the elderly and ranged from false cash prizes to impersonate government officials from IRS to posing as distressed relatives who need money.

"The alleged failure of MoneyGram to implement key order provisions has allowed scammers to continue using their money transfer system to steal consumers," said Joe Simons, president of FTC in a press release.

Fraudsters often convince people to use money transfers because they can remain anonymous and funds can be sent globally. Once the criminals collect the money, it is almost impossible for the victims to recover their money. From January to September this year, 54% of the impostor-government scams involved the use of a gift card or a rechargeable payment card, according to the FTC. But the next most common payment method was a bank transfer.

Read more: Gift cards are the preferred payment no. 1 requested by the scammers

The FTC claims that MoneyGram knew that some agents ignored suspicious activities. The company was required to "promptly investigate, limit, suspend and terminate high-risk agents", according to the FTC. Instead, the FTC claims, the company established policies that required agents to have unreasonably high rates of fraud before they could be suspended or extinguished.

"Some of the chain's locations had fraud rates of 50% of money transfer activities," the FTC said. "When he undertook disciplinary action, MoneyGram focused on low-volume agents," mum and dad "with high levels of fraud, while treating large chain agents differently."

The company will also provide reimbursements to victims of fraud in cases where its agents have not complied with their policies and procedures, the FTC said.

The $ 125 million MoneyGram will also have to pay to settle the charges from a separate 2012 agreement with the Justice Department.

Read more: That's NOT the IRS calling you!

In 2012, DOJ's allegations were filed against MoneyGram in Pennsylvania, as the company has not maintained an effective anti-money laundering program. The Justice Department postponed the five-year trial of MoneyGram's promise to strengthen its anti-fraud efforts. The government said that MoneyGram did not adhere to this agreement properly and as a result has processed at least $ 125 million in fraudulent transactions between April 2015 and October 2016.

In responding to the deal, MoneyGram said it had introduced new standards that prevented about $ 1.5 billion of fraudulent transactions.

"Over the last few years, we have taken significant steps to improve our compliance program and have solved many of the problems encountered in the agreements," said Alex Holmes, MoneyGram president and CEO, in a communication on the agreement.

The company stated that fraud reports are less than 0.05% of all transactions carried out through its money transfer systems.

MoneyGram has agreed to further expand its efforts to block money transfers from known scammers. In particular, in the context of an extension of the referral agreement affected by the DOJ, MoneyGram accepted the following:

– Reported scammers will not be able to use the MoneyGram transfer system within two days of receiving a complaint identifying such persons.

– Individuals from all over the world will have to show a government issued identity document to send or receive money transfers.

– Money transfers from the United States will be monitored.

– Agents who have experienced a high volume of transactions related to reported scammers will be terminated, regulated or subject to restrictions.

The $ 125 million paid by MoneyGram will be given to victims of fraud through the DOJ victims compensation program.

If you think you're a victim, DOJ says go to or call 844-269-2630. There is little information on the website right now, but you can sign up for updates that will include how to claim compensation.

Read more:

The scammers who fooled the elderly for over half a billion dollars

An old fiscal scam – with a disturbing new twist

How to prevent a typo from making you the victim of identity theft

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