Attorney General Gansler Announces Agreement with MoneyGram Aimed at Fraudulent Wire Transfers

BALTIMORE, MD (July 2, 2008) - Attorney General Douglas F. Gansler announced today that MoneyGram Payment Systems, Inc., has entered into an agreement with Maryland, 43 other states, and the District of Columbia, in response to concerns about the use of the company’s wire transfer services by fraudulent telemarketers. Under the Agreement, MoneyGram will, among other things, fund a $1.1 million national consumer awareness program and set out very prominent consumer warnings on the forms used by consumers to wire money. 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.

The problem addressed by the Agreement is the high number of “fraud-induced transfers” – 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 in order to claim the winnings. The victims are often directed to send the money by wire because of the speed and ease with which the scam artists can obtain the funds.

“I am pleased that MoneyGram is taking steps to diminish the use of its wire transfer network by scam artists,” said Attorney General Gansler. “Consumers should always be cautious about wiring money to anyone they do not know.”

According to the terms of the Agreement, MoneyGram will:

• Display prominent warnings to consumers of the dangers of fraud-induced wire transfers in English and Spanish on the front page of MoneyGram’s Send Form, and comparable warnings are required for telephone and Web transfers;
  
• Pay $1.1 million for a national consumer education program on how to avoid fraud-induced transfers, to be overseen by the AARP Foundation;
  
• Continue its current policy of reimbursing the amount of any transfer to a consumer who requests, prior to pickup, that the transfer be stopped, and reimbursing transfer fees as well if the consumer reasonably claims that the transfer was fraud-induced;
  
• Send prominent anti-fraud messages to its agents electronically every month or whenever a proposed transfer exceeds a certain amount, revise and enhance the company’s agent anti-fraud training programs, and provide special training to agents with elevated fraud levels at their locations;
  
• Take appropriate action to suspend or terminate agent locations that are involved in fraud or that do not take reasonable steps to reduce fraud;
  
• Block wire transfers from specific consumers or to specific recipients when the company receives information from a state that there are good faith grounds to believe that fraud will occur, until such time as the consumer is counseled on fraud and requests resumption of the transfer.

Also signing the agreement were the states of Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia and Wyoming, and the District of Columbia.