Earlier today, Nebraska Attorney General Doug Peterson made a decision regarding the issue that MoneyGram Payment Systems Inc. was involved in. With this decision by Lisa Madigan, the multistate investigation comes to a close. Madigan's office was just one of the eight states that lead the settlement negotiations in behalf of the District of Columbia and 48 other states.
The investigation drew attention when complaints from MoneyGram consumers were received over their wire transfer service in sending money to third parties. According to the complaints, this service was being used as a scheme for defrauding. Allegedly, MoneyGram's wire transfer service played a role in several consumer fraud scams used by con artists. Mostly, these scams involved counterfeit check schemes and international lottery scams which all persuaded consumers to wire money to the con artist with the hope of receiving some sort of financial gain so they can claim their winnings.
With Madigan's decision, she addresses the issue that many consumers needed MoneyGram to consider. First of all, improve their fraud detection and prevention. According to the agreement, MoneyGram will need to improve its fraud detection and prevention methods. They have been ordered by the court to enhance and maintain a comprehensive anti-fraud program which should be document in writing and include mandatory and documented compliance training for agents, suspension or termination of agents who fail to take reasonable steps in reducing fraudulently induced money transfers, implement a telephone and online system for employees and agents to report noncompliance with anti-fraud measures, continue improving their Anti-Fraud Alert System (AFAS) technology, and improve methods in evaluating and tracking fraud rates and consumer losses.
The other part of the settlement requires the Dallas-based company to pay $13 million to the participating states. This money will fund a nationwide consumer restitution program, as well as cover states' costs and fees.
The agreement also stipulates that an independent third party settlement administrator will be in charge of reviewing MoneyGram's records and send notices to all eligible consumers for restitution. Consumers may qualify for retribution as long as they have filed complaints with MoneyGram between July 1, 2008 and Aug. 31, 2009.
As an end, Madigan warns that all should "beware of unsolicited requests from strangers" who are asking for money to be wired in exchange of a bigger amount. She shares that individuals should "immediately hang up the phone, throw the letter in the trash or delete the email." These scams should also be reported to the Consumer Fraud Bureau so that others can be alerted on the existence of scams such as these.
