FTC presses MoneyGram to pay $18 million fine and change anti-fraud policy

 A global leader in the payment services industry MoneyGram International has achieved a settlement with the Federal Trade Commission (FTC) over introducing some alterations to its consumer anti-fraud program. The company will have to improve its policies so as to further combat consumer fraud perpetrated by criminals who use MoneyGram's services illegally.

"At MoneyGram, we take the issue of consumer fraud very seriously. Our ability to provide safe and reliable money transfer services for our consumers is critically important," said Pamela H. Patsley, MoneyGram chairman and CEO. "MoneyGram has committed extraordinary resources to building a state-of-the-art consumer anti-fraud program."

Besides, the company will pay $18 million in consumer redress to settle FTC charges that the company allowed its money transfer system to be used by fraudulent telemarketers to bilk U.S. consumers out of tens of millions of dollars.

The FTC alleged that between 2004 and 2008, MoneyGram agents helped fraudulent telemarketers and other con artists who lured U.S. consumers into wiring more than $84 million within the United States and to Canada – after these consumers were falsely told they had won a lottery, were hired for a secret shopper program, or were guaranteed loans. The $84 million in losses is based on consumer complaints to MoneyGram – actual consumer losses likely are much higher.

The FTC stated that the company was aware of the fraudulent scheme but did nothing to protect the victims.

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