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TRENTON
– Attorney General Anne Milgram announced
today that New Jersey has entered into a
multi-state settlement agreement with Minneapolis-based
MoneyGram Payment Systems, Inc. that addresses
the problem of bogus telemarketers and others
using the company’s money transfer
services for fraud.
Under
terms of the agreement, MoneyGram will pay
$1.1 million toward a national consumer
awareness program. MoneyGram will also place
prominent, bi-lingual warnings about wire
transfers being used for fraud on Send Forms
used by consumers to wire money. MoneyGram
has 744 money transfer agencies located
in 220 cities and towns throughout New Jersey.
The
problem addressed by the settlement agreement
between MoneyGram, New Jersey and the other
participating states is “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 unwitting consumers they
have won a large sum of money, but must
pay taxes or other charges in order to claim
their winnings. The victims are often directed
to send the “tax” money by wire,
because wire transfers are fast, there are
transfer agents in most communities, and
funds can be picked up in multiple locations.
“The
problem of fraud-induced money transfers
is significant,” said Attorney General
Milgram. “Through this agreement,
we are ensuring there will be heightened
fraud awareness among wire-transfer users.
In addition, MoneyGram has agreed to take
a number of steps to discourage use of its
transfer services for fraudulent purposes.”
Under
terms of the multi-state Agreement of Voluntary
Compliance, MoneyGram will:
- continue
its current policy of reimbursing the
amount of any transfer to a consumer who
requests, prior to pick-up, that the transfer
be stopped. MoneyGram will also reimburse
transfer fees, if the consumer reasonably
claims that the transfer was fraud-induced.
-
send prominent anti-fraud messages to
its agents electronically each month,
or whenever a proposed transfer exceeds
a certain amount.
-
revise and enhance the company’s
anti-fraud training programs, and provide
special training to agents with elevated
fraud levels at their locations.
-
take appropriate action to suspend or
terminate company locations that are involved
in fraud or that do not take reasonable
steps to reduce fraud.
- •
block wire transfers when it receives
information from the state that there
are credible grounds to believe fraud
will occur.
-
ensure that money transfers sent from
the United States can only be picked up
in the country designated by the sender,
with a potential extension of this policy
to the state or provincial level if the
pickup of fraud-induced transfers in states
or provinces to which consumers do not
intend to send money becomes a significant
problem in the future.
-
pay $150,000 to be shared among the negotiating
states of New Jersey, Arkansas, Illinois,
Massachusetts, North Carolina, Ohio, Texas,
Vermont and Washington.
In
addition to New Jersey, the other eight
negotiating states, and the District of
Columbia, the following states have signed
onto the MoneyGram settlement agreement:
Alabama, Alaska, Arizona, Colorado, Connecticut,
Delaware, Georgia, Hawaii, Idaho, Indiana,
Iowa, Kansas, Kentucky, Louisiana, Maine,
Maryland, Michigan, Minnesota, Mississippi,
Missouri, Montana, Nevada, New Hampshire,
New Mexico, New York, North Dakota, Oklahoma,
Oregon, Rhode Island, South Carolina, South
Dakota, Utah, Virginia, West Virginia and
Wyoming.
Deputy
Attorney General Cathleen O’Donnell,
of the Consumer Fraud Prosecution Section
within the Division of Law, handled the
MoneyGram matter on behalf of the state.
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