InvestigatorsMatter for Mallory


Refunds being issued to money transfer scam victims

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Posted at 6:00 AM, Jun 08, 2021
and last updated 2021-06-08 07:06:39-04

BALTIMORE — Hundreds of thousands of people duped into sending money to con artists could get some of it back.

MoneyGram agreed to pay a $125 million settlement, which is being used to issue refunds to consumers who sent money to scammers with the wire transfer service.

“Folks who are eligible to file a claim would’ve sent a fraud-induced MoneyGram transfer between January 1, 2013 and December 31, 2017,” said Todd Kossow, director of the Federal Trade Commission’s Midwest Region.

In 2009, a judge ordered MoneyGram to implement anti-fraud programs, but the FTC later found they weren’t fully complying with that order. According to the order, MoneyGram knew of some agent locations with fraud rates of more than 25 percent or even 50 percent and didn’t step in until mid-2013. MoneyGram then started a pilot program, but hadn’t suspended any of those locations until May 2017.

“What our investigation in this area has shown is sometimes these agents themselves are complicit in fraud and that’s a failure of MoneyGram to vet its agents. They may need to train their agents and the front-line associates paying out money transfers so if they’re suspicious that something is fraud-induced and are being asked to pay it out, they should recognize the signs of fraud and stop it,” Kossow said.

MoneyGram did not admit or deny the allegations but agreed to the settlement to refund fraud victims.

“At the time there were 300,000 complaints to MoneyGram for the relevant time period. We know that’s only a fraction of the actual victims though,” said Kossow.

Fraud victims who filed complaints were already sent a prefilled form to submit a claim to get their money back. Prefilled claim forms were due by June 1.

The remission administrator is now accepting claims forms from anyone who hadn’t complained to the company but were scammed during that time. The deadline to submit a claim form is August 31, 2021. Click here to file a claim online.

Depending on how many people file claims will impact the amount issued to individuals.

This crackdown on money transfer services is not uncommon. The FTC secured a $586 million dollar settlement from Western Union and continues to evaluate other transfer services anti-fraud programs.

“Is it a message to other services such as Cash App, a new favorite of scammers, for the platform to do more to stop fraudulent transactions?” asked WMAR-2 News Mallory Sofastaii.

“If scammers are using your platform and the platform knows about it and is not doing enough to stop it, they need to be doing more,” said Kossow.

Even though the refunds apply to victims scammed several years ago, it could still take up to a year to receive a refund.

The U.S. Postal Inspection Service will need to review documents showing the transfer was related to fraud and then make a decision on the claim.

If a consumer was scammed after 2017, the FTC recommends filing a claim with the money transfer company. With MoneyGram, you may not get a refund, however, the order requires the service to investigate your complaint.

WMAR-2 News contacted MoneyGram about the settlement. A spokesperson sent the statement below:

MoneyGram recently announced positive developments around its official exit from the Deferred Prosecution Agreement ("DPA"). The Company filed a joint status report with the government which states that the independent compliance monitor officially certified the effectiveness of the Company’s compliance program as required by the DPA and that MoneyGram has met its financial obligations under the DPA.

The Company is pleased with its timely termination of the DPA and monitorship and extremely proud of its industry-leading compliance program. MoneyGram has implemented the highest consumer data collection capabilities in the industry and its customer ID verification standards, technology platforms, and data-driven controls have helped to bring consumer fraud rates to all-time lows.

This marks yet another milestone on the Company’s transformational journey, and MoneyGram will continue to remain vigilant in protecting consumers to ensure its services are utilized for their true purpose – to provide a reliable financial connection to friends & family around the world.