July 2, 2008
Jefferson City, Mo. - A Minnesota company that provides money transfer services to hundreds of thousands of locations around the world will fund a $1.1 million national consumer awareness program under a multi-state agreement with Attorney General Jay Nixon, 43 other states and the District of Columbia. Missouri is part of the assurance of voluntary compliance with MoneyGram Payment Systems, Inc., reached in response to concerns about the use of the company's wire transfer services by fraudulent telemarketers. The agreement was filed today in Cole County Circuit Court.
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.
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. For example, some telemarketers - often based in other countries - use a "lottery" scam, in which they tell vulnerable consumers they have won a large sum of money but must pay taxes or other charges to claim their winnings. The victims are then directed to send the money by wire, because wire transfers are fast, there are transfer agents in most communities, and funds can be picked up in multiple locations.
Nixon says the problem of fraud-induced transfers is substantial. In 2003, a survey conducted by seven states concerning transfers of over $300 to Canada by another major money transfer company estimated that over 29 percent of those transfers were fraud-induced, resulting in consumers losses in the year 2002 of approximately $113 million nationally.
"To keep perpetrators from defrauding consumers, we need to make it harder for them to utilize traditional methods of transferring money," Nixon said. "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."
According to today's agreement, MoneyGram has agreed to:
Nixon and 46 other Attorneys General reached a similar agreement with Western Union Financial Services in November 2005, in which the company agreed to fund a program aimed at educating consumers that wire transfers are often sent by victims of scams.