|TRENTON – Acting Attorney General John J. Hoffman announced today that New Jersey has joined a multi-state settlement with Texas-based MoneyGram Payment Systems, Inc. that resolves an investigation by the participating states focused on complaints from persons who wired money to third parties engaged in fraud using MoneyGram’s wire transfer service.
Under the settlement, MoneyGram has agreed to maintain -- and continue to improve -- a comprehensive and robust anti-fraud program designed to help detect bogus solicitations and prevent financial loss as a result of fraud-induced wire transfers.
The Dallas-based company also has agreed to pay the 49 participating states and the District of Columbia a total of $13 million, approximately $9 million of which will be used for restitution. New Jersey was among eight states that comprised a multi-state Executive Committee investigating MoneyGram’s efforts to reduce fraud-induced money transfers.
“Sadly, con artists use an array of scams to prevail on people to wire them money,” said Acting Attorney General Hoffman. “These range from the heartless ‘grandchild 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 lottery and contest scams. In these lottery and contest scams, potential victims are told they’ve won a large sum of money but, in order to claim the prize, they must first wire money to cover required taxes or fees.”
The settlement announced today calls for MoneyGram to maintain an anti-fraud program that is documented in writing and, at a minimum, includes the following elements:
- a hotline system --telephonic and electronic – through which employees and agents can report non-compliance with anti-fraud measures;
- sound mechanisms to evaluate actual fraud rates and consumer losses caused by fraud-induced money transfers, in order to utilize that information to improve compliance;
- continued enhancement of technology solutions, including MoneyGram’s Anti-Fraud Alert System (AFAS);
“People who receive solicitations from strangers promising big winnings should keep in mind the old adage that, ‘If it sounds too good to be true, it most likely is,’ “said Acting Attorney General Hoffman. “We urge anyone who receives such a solicitation to simply toss those letters in the trash, delete the e-mail or hang up the phone. And individuals who are contacted about dire circumstances confronting their grandchild, friend or family member should not take the word of the caller, but rather reach out independently to their loved ones and learn the truth.”
In addition to its required anti-fraud measures and monetary terms, the MoneyGram settlement provides for an independent third-party Settlement Administrator who will review MoneyGram records and send notices concerning restitution to all persons eligible to receive it under the settlement.
Generally, consumers eligible for restitution under the agreement are those who previously filed complaints with MoneyGram between July 1, 2008 and August 31, 2009. The complaints pertained to fraud-induced transfers sent from the U.S. to foreign countries other than Canada. More information about the settlement is available at the Settlement Administrator’s Web site: www.MoneyGramSettlement.com
Deputy Attorney General Cathleen O’Donnell, of the Division of Law Consumer Fraud Prosecution Section, handled the MoneyGram matter on behalf of the State.