Attorney General Peter F. Kilmartin today announced a settlement with Dallas-based MoneyGram Payment Systems, Inc. (MoneyGram) 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 Rhode Island, 48 states and the District of Columbia participated in this settlement.
"Con artists use a wide variety of schemes to persuade consumers to wire them money," said Attorney General Kilmartin. "These range from the heartless 'grandparent or relative in distress' scam, in which a fraudster contacts a grandparent and falsely claims that money must be wired to assist with a grandchild's medical or legal emergency to international lottery and contest scams in which consumers are told they have won a large sum of money but must first wire money to pay required taxes or fees before receiving their winnings. Consumers who receive solicitations from strangers promising big winnings should toss those letters in the trash, delete the e-mail or hang up the phone."
The settlement has two main components. First, 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 these types of fraud induced wire transfers. The program must be documented in writing and at a minimum, must 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).
Second, MoneyGram has 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. Under the terms of the settlement, the State of Rhode Island will receive $20,000 for costs and fees associated with the investigation and settlement.
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 Rhode Island, 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, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia.
Click here for a FAQ on the settlement.