MoneyGram gets $18 mil slap

Joan Nash

Joan Nash of Joseph lost $12,500 in September 2008 when she was scammed by a man claiming to be her grandson in a money-wiring scheme.

The con artist claimed that an accident with an under-insured rental car had landed him in jail and he needed $6,000 to pay for damages to the car.

Over the next few days, he induced Nash to wire him a total of $12,500 before Walmart employees tipped Union County Sheriff's Office to the exchange and expressed concern about the transactions. The Union County Sheriff's Office contacted Wallowa County Sheriff Fred Steen, who immediately got on the phone with MoneyGram's security division and was told they could do nothing.

"I expressed my concern that MoneyGram was aware that a criminal enterprise was using their company to further their goals. It didn't appear to me as they were making any significant effort to stop that," Steen said.

Steen was right, according to the Federal Trade Commission.

This week, Nash and thousands of other Americans got a glimmer of hope that they might see a bit of that money returned.

On Oct. 20, the commission announced that MoneyGram International, Inc., has agreed to pay $18 million to settle charges that it allowed con artists to engage in money-transfer schemes that ultimately robbed Americans of an estimated $84 million. The $84 million in losses is based on consumer complaints to MoneyGram - actual consumer losses likely are much higher.

The FTC charged that, as Steen has suspected, MoneyGram knew that its system was being used to defraud people for years, but did very little about it and in some cases its agents in Canada actually participated in these schemes.

According to the FTC, MoneyGram knew or avoided knowing that about 131 of its more than 1,200 agents accounted for more than 95 percent of the fraud complaints it received in 2008 regarding money transfers to Canada.

Furthermore, at least 79 percent of all MoneyGram transfers of $1,000 or more from the United States to Canada over a four-month period in 2007 were fraud-induced.

MoneyGram officials knew of the rot in their company, FTC claimed, and not only ignored law-enforcement complaints and failed to enforce the company's own fraud prevention policies, but fired or disciplined some employees who raised concerns.

Scammers using MoneyGram as their wire-transfer source told American victims that they had won a lottery, were hired as a secret shopper, were being offered guaranteed loans or engaged in "grandmother scams" exactly like the one perpetrated on Nash.

"Just when you think there is nothing lower than a snake, these people show up," said Claudia Bourne Farrell, spokesperson for the FTC.

Farrell encouraged Nash to apply for settlement fees, informing the Chieftain that one victim of a "grandmother scam" in the Midwest is already receiving compensation from the $18 million settlement.

Nash had originally called "everyone," she said.

"I called Canada, I called the Oregon Attorney General's office. I filed papers. I haven't heard a word from anybody until now. It sure would be nice if I could recover something."

Steen had also run into roadblocks in his attempt to retrieve Nash's money. In addition to hitting a stone wall with MoneyGram, Steen was informed that because the money was wired to Canada, legal jurisdiction was confused. Furthermore, Steen said, the Federal Bureau of Investigation informed him that scammers routinely used disposable, pre-paid cell phones that were impossible to trace.

In fact, if direct complaint to the company does not work, filing a complaint with the FTC is the only route to potential redress currently available. Although the FTC does not address individual complaints, it is important to file a complaint to be part of any settlement the FTC reaches in behalf of a group of complainants.

Persons who suspect they have been victims of money-transfer scams should immediately contact the wire-transfer company, report the situation and file a complaint with the FTC.

Complaint forms can be found at www.ftccomplaintassistant.gov or reports can be made by calling 1-877-FTC-HELP (1-877-382-4357).

MoneyGram Chairman and Chief Executive Pamela H. Patsley said the company took consumer fraud seriously.

She disagreed with the FTC's charges, calling the settlement a "commitment to enhance our already comprehensive efforts to combat fraud."

The FTC has also required MoneyGram to implement anti-fraud and monitoring programs.

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