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Thread: MoneyGram settles with Federal Trade Commission

  1. #1
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    MoneyGram settles with Federal Trade Commission

    MoneyGram International Reaches Agreement with FTC
    Tue Oct 20, 2009 11:15am EDT

    MINNEAPOLIS--(Business Wire)--
    MoneyGram International (NYSE:MGI), a global leader in the payment services industry, today entered into an agreement with the Federal Trade Commission (FTC) to make certain enhancements to its consumer anti-fraud program to further combat consumer fraud perpetrated by criminals who use MoneyGram`s services illegally.

    "At MoneyGram, we take the issue of consumer fraud very seriously. Our ability to provide safe and reliable money transfer services for our consumers is critically important," said Pamela H. Patsley, MoneyGram chairman and CEO. "MoneyGram has committed extraordinary resources to building a state-of-the-art consumer anti-fraud program."

    The company has begun implementing new systems and processes to further bolster consumer protection, which have been effective at stopping millions of dollars in fraudulent transactions every year.

    "While we don`t agree with the FTC`s allegations regarding our fraud prevention in the past, we can agree on fraud prevention today and in the future," said Patsley. "We don`t want our customers being victimized by third-party fraud. What we are announcing today with the FTC is our commitment to enhance our already comprehensive efforts to combat fraud and ensure our customers can continue to rely on MoneyGram for safe, reliable money transfer services."

    MoneyGram provides consumer warnings about the latest scams on its website and money transfer send-forms, and through its 24-hour customer service center. The company also works closely with local, state, federal and international law enforcement to combat this global criminal activity.

    "We are committed to be vigilant in our efforts in protecting our customers from fraudulent activity," said Patsley. "Ensuring safe and reliable money transfers for our customers all over the world is at the forefront of all we do."

    As part of its agreement with the FTC, the company has also agreed to pay $18 million into an FTC-administered fund to refund consumers who have been
    victimized through third-party fraud.

    About MoneyGram International
    MoneyGram International offers more control and more choices for people separated by distance or with limited bank relationships to meet their financial needs. A leading global payment services company, MoneyGram International helps consumers to pay bills quickly and safely send money around the world in as little as 10 minutes. Its global network is comprised of 180,000 agent locations in nearly 190 countries and territories. MoneyGram`s convenient and reliable network includes retailers, international post offices and financial institutions. To learn more about money transfer or bill payment at an agent location or online, please visit www.moneygram.com.

    MoneyGram International
    Media:
    Lynda Michielutti, 952-591-3846
    [lmichielutti@moneygram.com]
    or
    Investors:
    Alex Holmes, 720-568-8703
    [aholmes@moneygram.com]

    http://www.reuters.com/article/press...009+BW20091020
    419- You can check out any time you want but you can never leave!
    And don't take off your shoes!

  2. #2
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    The FTC point of view.

    MoneyGram to Pay $18 Million to Settle FTC Charges That it Allowed its Money Transfer System To Be Used for Fraud Company Also Required to Implement Comprehensive Anti-Fraud Program and to Monitor its Agents

    MoneyGram International, Inc., the second-largest money transfer service in the United States, will pay $18 million in consumer redress to settle FTC charges that the company allowed its money transfer system to be used by fraudulent telemarketers to bilk U.S. consumers out of tens of millions of dollars. MoneyGram also will be required to implement a comprehensive anti-fraud and agent-monitoring program.

    The FTC charged that between 2004 and 2008, MoneyGram agents helped fraudulent telemarketers and other con artists who tricked U.S. consumers into wiring more than $84 million within the United States and to Canada – after these consumers were falsely told they had won a lottery, were hired for a secret shopper program, or were guaranteed loans. The $84 million in losses is based on consumer complaints to MoneyGram – actual consumer losses likely are much higher.

    The FTC charged that MoneyGram knew that its system was being used to defraud people but did very little about it, and that in some cases its agents in Canada actually participated in these schemes. According to the FTC’s complaint, MoneyGram knew, or avoided knowing, that about 131 of its more than 1,200 agents accounted for more than 95 percent of the fraud complaints it received in 2008 regarding money transfers to Canada; a similarly small number of agents was responsible for more than 96 percent of all fraud complaints to the company in 2006.

    “Money transfer services have a responsibility to make sure their systems don’t become conduits to rip people off,” said David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. “In this case, MoneyGram not only ducked this responsibility, but also looked the other way while its agents took part in the scams.”

    Minneapolis, Minnesota-based MoneyGram operates through a worldwide network of approximately 180,000 agent locations in 190 countries and territories. In its complaint, the FTC charged that in recent years this network has increasingly been used by telemarketing scammers to prey on U.S. consumers. Con artists prefer to use money transfer services because they can pick up transferred money immediately, the payments are often untraceable, and victimized consumers have no chargeback rights or other recourse.

    In 2007, 72 percent of all complaints received by the FTC involving Canadian-based fraud reported using money transfer services to make payments. According to a recent FTC survey cited in the complaint, at least 79 percent of all MoneyGram transfers of $1,000 or more from the United States to Canada over a four-month period in 2007 were fraud-induced. The Commission’s complaint further stated that based on the more than 20,600 fraud complaints MoneyGram itself received, U.S. consumers lost more than $44 million to cross-border money-transfer frauds between 2004 and 2008 alone. When combined with losses reported by U.S. consumers on money transfers within the United States, that number grows to $84 million.

    In many of the scams that used MoneyGram’s money transfer system, the con artists used counterfeit checks to induce consumers to send money back by wire transfer. The most prevalent of these scams were lottery or prize schemes in which consumers were told they had won thousands of dollars and just had to pay a fee for “taxes,” “customs,” or “insurance” to a third-party to collect their winnings. Consumers paid the fee using MoneyGram, but received nothing. In another scheme, telemarketers told consumers they were guaranteed loans, regardless of their credit score. All they had to do was pay “insurance,” “paperwork,” or “processing” fees to complete the transaction. Consumers who sent funds using a money transfer service got nothing in return.

    In mystery shopping scams, the con artists called U.S. consumers or sent them a piece of direct mail in which they claimed to be hiring consumers to visit stores such as Wal-Mart to evaluate MoneyGram money transfer operations. The con artists sent consumers a cashier’s check, telling them to deposit it in their checking account and then send most of the money back using a money transfer at Wal-Mart. When the counterfeit checks bounced, consumers realized they had lost the money they transferred. By this time, however, the money transfer agents had already received and paid out the money, often either without checking IDs or by using fake drivers license information.

    The FTC’s complaint alleges that MoneyGram ignored warnings from law enforcement officials and even its own employees that widespread fraud was being conducted over its network, claiming that proposals to deal with the problem were too costly and were not the company’s responsibility. The company even discouraged its employees from enforcing its own fraud prevention policies or taking action against suspicious or corrupt agents. Some employees who raised concerns were disciplined or fired, the FTC charged.

    In addition, at least 65 of MoneyGram’s Canadian agents have been charged by Canadian or U.S. law enforcers with, or are currently being investigated for, colluding in fraud schemes that used the MoneyGram system.

    The complaint charges MoneyGram with violating both the FTC Act and the FTC’s Telemarketing Sales Rule by helping sellers or telemarketers who it knew – or consciously avoided knowing – were violating federal law, and for not taking adequate steps to prevent fraud.

    The agreed-upon court order settling the FTC’s charges bars MoneyGram from knowingly providing substantial help or support to any sellers or telemarketers that are violating the Telemarketing Sales Rule and requires it to implement a comprehensive anti-fraud program. Under the anti-fraud program, MoneyGram must conduct background checks on prospective agents; educate and train its employees about consumer fraud; institute agent monitoring; and discipline agents who don’t comply with the rules. The order also requires MoneyGram to provide a clear and conspicuous fraud warning on the front of all its money transfer forms. The order’s conduct provisions apply to all MoneyGram money transfers sent worldwide from either the United States or Canada.

    The order contains monitoring and discipline provisions that will ensure MoneyGram is properly training, monitoring, and taking actions to address problems related to its agents. To do this, the order requires MoneyGram to develop and maintain a system for receiving consumer complaints and data, and to provide that information to the FTC upon request. MoneyGram also must take all reasonable steps to identify agents that are involved in fraud. It must review its transaction data to identify any unusual or suspicious activity by its agents and fire any agent who it believes may be participating in fraudulent activities. It also must fire or suspend any agent who has not taken appropriate steps to stop fraudulent money transfers.

    Finally, MoneyGram will pay the Commission $18 million, which will be used to provide redress to consumers.

    Consumer Education

    The FTC has a new Consumer Alert, available on its Web site at http://ftc.gov/bcp/edu/pubs/consumer/alerts/alt034.shtm, titled “Money Transfers Can Be Risky Business.” It includes useful information on how consumers can avoid telemarketing and money transfer fraud, including the following tips. Don’t wire money to:

    * someone you don’t know, in the U.S. or in a foreign country;
    * someone claiming to be a relative in the midst of a crisis and who wants to keep the
    request for money a secret;
    * someone who says a money transfer is the only form of payment that’s acceptable; or
    * someone who asks you to deposit a check and send some of the money back.

    Consumers interested in the process of redress administration should call 202-326-3755.

    The FTC’s case was investigated with the assistance of the Toronto Strategic Partnership, Project Colt, Project Emptor, and the U.S. Postal Inspection Service. Additional assistance was provided by the Durham Regional Police Service, Ontario, Canada, and the Canadian Anti-Fraud Call Centre (PhoneBusters).

    The Toronto Strategic Partnership includes the FTC, the U.S. Postal Inspection Service, Competition Bureau Canada, the Toronto Police Service Fraud Squad – Mass Marketing Section, the Ontario Provincial Police Anti-Rackets Section, the Ontario Ministry of Consumer Services, the Royal Canadian Mounted Police, and the United Kingdom's Office of Fair Trading. Project Colt includes the FTC, the Royal Canadian Mounted Police, Surete du Quebec, City of Montreal Police Service, Canada Border Services Agency, Competition Bureau Canada, U.S. Homeland Security, U.S. Postal Inspection Service, and the Federal Bureau of Investigation. Project Emptor includes the FTC, the Business Practices and Consumer Protection Authority of British Columbia, the Royal Canadian Mounted Police, Competition Bureau Canada, the Federal Bureau of Investigation, and the U.S. Postal Inspection Service.

    The Commission vote approving the complaint and proposed consent order was 3-0, with Commissioner Pamela Jones Harbour recused. The complaint and order were filed on October 19, 2009, in the U.S. District Court for the Northern District of Illinois, Eastern Division.

    NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has or is being violated, and it appears to the Commission that a proceeding is in the public interest. A complaint is not a finding or ruling that the defendants have actually violated the law. A stipulated court order is for settlement purposes only and does not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the force of law when signed by the judge.

    Copies of the complaint and stipulated order are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,700 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

    MEDIA CONTACT:
    Mitchell J. Katz
    Office of Public Affairs
    202-326-2161

    Claudia Bourne Farrell
    Office of Public Affairs
    202-326-2181
    STAFF CONTACT:
    Steven Baker
    Director, FTC Midwest Region

    Karen D. Dodge
    Attorney, FTC Midwest Region
    312-960-5634

    (FTC File No. 062-3187; Civ. No. 1:09-01-06576)
    (MoneyGram.final)

    http://www.ftc.gov/opa/2009/10/moneygram.shtm
    Silence is the scammer's best friend; knowledge is the scammer's worst enemy. 沈黙は詐欺師のよき友達、知識は詐欺師の天敵。Think globally, act globally.

  3. #3
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    Seems like a nolo contendere plea to me. They don't admit the charge but they take the penalty anyway. Also called "no contest".
    "If the law can do nothing we must take the risk ourselves...I am not the law but I represent justice..."- Sherlock Holmes
    "The good of the people is the highest law"- Cicero

  4. #4
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    You think they're really going to stop it?
    "blessed is the hand that grivets."
    "never you write me again idiot PIT TOILET" - Julliet Kipkalya Kones, from Burkina Faso

  5. #5
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    They could impose stringent ID requirements, clean up their operation and become known as a pro-active, anti-fraud company. They could refuse to pay out any money without proper identification and reverse any transfer that did not meet those stringent ID requirements. Or not.
    "If the law can do nothing we must take the risk ourselves...I am not the law but I represent justice..."- Sherlock Holmes
    "The good of the people is the highest law"- Cicero

  6. #6
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    If this is genuine it would be a kind of landmark decision! And would be a real breakthrough!
    However this is a company that is in the business of making money and if they can afford to give away $18 M Then it is a VERY profitable business.

    The question is, would they jeopardize this lucrative income if they could avoid it? By implementing voluntary "conditions" on their customers with the resulting loss of income, when a much larger company: Western union is standing by in the wings to make a pitch for their business?

    Forgive me if I am skeptical!
    *What the mind can conceive and believe, it can achieve.*

    "The law in the book can go byte itself in the ass. Watch it byte mine!" - Chandra Sekhar Sathyadas.

  7. #7
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    I didn't say I was optimistic they would change. I just said they could. Or not. Probably the "or not".
    "If the law can do nothing we must take the risk ourselves...I am not the law but I represent justice..."- Sherlock Holmes
    "The good of the people is the highest law"- Cicero

  8. #8
    sxyknikrs

    Lightbulb

    I used to work for MG back in the day when they were extremely dedicated to stopping telemarketing fraud. Most transactions went to Canada and MG had a policy that if the amount being sent was $1000 or more, or if the customer was a senior citizen, the customer was questioned about the reason for the transaction. Had pretty good luck stopping 9s0eaksome of the fraud. But, I gotta tell ya, I handled some of it myself, and some people believed so strongly that they had won something. Numerous times, I got cussed out and screamed at by customers who felt I was preventing them from getting their big windfall. That always shocked me. I had nothing to gain by telling them the truth, however, reason often did not prevail.

    After reading about this, I think MG may have just given up trying, to their own detriment.

  9. #9
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    The FTC said a survey found that at least 79% of all MoneyGram transfers of $1,000 or more from the United States to Canada over a four-month period in 2007 were fraud-related.
    Now, how hard to do you think Moneygram is going to fight fraud...when it is making so much money off of it?! I suspect that those figures are most likely reflective of most of all their international transfers. Moreover, when one considers that scammers, at least initially, ask for as little as $48 (http://antifraudintl.org/showthread.php?t=33753), what percentage of all Moneygram transfers from anywhere to anywhere, are fraud-related? 40%, 50%, maybe even 60%?
    Last edited by mysteryquest; 02-25-2010 at 03:19 AM. Reason: more info

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