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Post date: February 11 2016

A.G. Schneiderman Announces Settlement with MoneyGram Payment Systems Requiring Tougher Measures To Protect Against Wire Transfer Fraud

Schneiderman: As Fraudsters Continue To Innovate And Employ Increasingly Elaborate Tactics To Scam Unsuspecting Consumers, Businesses Must Uphold Strong Anti-Fraud Practices

NEW YORK—Attorney General Eric Schneiderman today announced a settlement with Dallas based MoneyGram Payment Systems, Inc., resolving a multistate investigation which focused on complaints of consumers who used MoneyGram’s wire transfer service to send money to third parties involved in schemes to defraud consumers. In addition to New York, 48 states and the District of Columbia participated in this settlement.

“Con artists use a wide variety of schemes that New Yorkers should always be on the lookout for,” Attorney General Schneiderman said. “As fraudsters continue to innovate and employ increasingly elaborate tactics to scam unsuspecting consumers, businesses must uphold strong anti-fraud practices to protect against those looking to make a quick buck.”

MoneyGram has agreed to maintain and continue to improve a comprehensive and robust anti-fraud program designed to help detect and prevent consumers from suffering financial losses as a result of fraud induced wire transfers.  The program must be documented in writing and at a minimum, include the following elements:

  • Mandatory and documented compliance training for agents and guidelines regarding when an agent’s conduct warrants suspension or termination;
  • Suspension or termination of agents who fail to take commercially reasonable steps to reduce fraud induced money transfers;
  • A hotline system – telephonic and electronic- where employees and agents can report noncompliance with anti-fraud measures;
  • Sound mechanisms to evaluate actual fraud rates and consumer losses from fraud induced money transfers in order to utilize that information to improve compliance; and 
  • Continued enhancement of technology solutions, including its Anti-Fraud Alert System (AFAS).

MoneyGram has also agreed to pay a total of 13 million dollars to the states to fund a nationwide consumer restitution program and for the states’ costs and fees.  The settlement provides for an independent third party settlement administrator who will review MoneyGram records and send notices regarding restitution to all consumers who are eligible to receive restitution under this settlement.   Generally, consumers who are eligible for restitution previously filed complaints with MoneyGram between July 1, 2008 and August 31, 2009 regarding fraud induced transfers sent from the U.S. to foreign countries other than Canada.

More information about this settlement is available at the Settlement Administrator’s website: www.MoneyGramSettlement.com

In addition to New York, the following participated in the settlement: Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia.