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MoneyGram to pay $18M to settle scam case

MoneyGram will pay $18 million to settle charges that it knowingly allowed fraudulent telemarketers to use its service to defraud consumers, sometimes with help from MoneyGram employees, according to the Federal Trade Commission.

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

Victims received calls from telemarketers who explained they had won a lottery, were hired for a secret shopper program or were guaranteed loans. They were instructed to wire money to a third party in Canada to cover taxes, customs, or insurance. In some cases, they were told to deposit and transfer money from a check, which would later bounce.

The actual damage to consumers exceeds $84 million, the FTC said. MoneyGram, in a company statement, said it doesn’t agree with the allegations but it agrees to prevent fraud today and in the future. The settlement also requires MoneyGram to enact an anti-fraud program.

MoneyGram, a publicly traded company headquartered in St. Louis Park, was trading at $3.25 per share Tuesday afternoon and fell off only slightly following the settlement announcement. It opened trading today at $3.18 per share and rose to $3.20.

Meanwhile, the Federal Trade Commission is trying to get the following message out: Never transfer money to someone you don’t know.

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