Next time, you may want to use Western Union.
Courthouse News: MoneyGram International will pay $18 million to settle FTC charges that it let con artists to use its money transfer system to bilk consumers of $84 million. The FTC says the company looked the other way despite receiving more than 41,000 complaints of fraud, from customers and from its own employees.
According to the complaint, “fraudulent telemarketers and other con artists” used MoneyGram’s (MGI) service for the fraud, telling unsuspecting customers they had won a lottery, had been guaranteed a loan or were hired as “secret shoppers.” The mostly Canadian schemers allegedly persuaded the often elderly victims to wire $1,000 or more in “fees,” and then did nothing.
Between 2004 and 2008, a full one quarter of consumer complaints — more than 41,000 — were about fraud, but MoneyGram hardly reacted, according to the FTC, and customers lost at least $84 million. The $18 million fine will go to the victims.
MoneyGram says they were doing enough to protect consumers in the past.
“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 MoneyGram chairman and CEO Pamela H. Patsley in a statement. “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 is second only to Western Union in the U.S. and has 180,000 locations in nearly 190 countries worldwide.
Here’s the complaint.
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