COLUMBUS--Ohio Attorney General Mike DeWine today announced that Ohio is part of a $13 million settlement with Dallas-based MoneyGram Payment Systems Inc. over concerns that consumers used MoneyGram to make payments that were induced by fraud.
The settlement, which includes Ohio, 48 other states, and the District of Columbia, requires MoneyGram to establish and maintain anti-fraud procedures and to pay a total of $13 million, of which up to $9 million will be used to reimburse consumers.
"We know that wire transfers - while a legitimate form of payment - have often been used by con artists in scams," DeWine said. "In this settlement, MoneyGram has agreed to pay millions of dollars to reimburse consumers and take steps to stop fraud before it occurs."
MoneyGram has a global network of approximately 350,000 locations where money transfers are sent and received.
The states' investigation focused on complaints from consumers who used MoneyGram's wire-transfer service to send money to third parties involved in schemes to defraud consumers, such as lottery scams or "grandparent scams," in which con artists trick grandparents into sending money by claiming their grandchildren are in trouble.
Under the settlement, 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 anti-fraud program must be documented in writing and, at a minimum, must include the following elements:
- Mandatory and documented compliance training for "agents" (entities that offer MoneyGram products) and guidelines about 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 that employees and agents can use to 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 MoneyGram's Anti-Fraud Alert System (AFAS).
Of the $13 million MoneyGram has agreed to pay, most will be allocated to fund a nationwide consumer restitution program. According to the settlement terms, an independent third-party settlement administrator 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 Aug. 31, 2009, regarding fraud-induced transfers sent from the U.S. to foreign countries other than Canada.
Additional payment will be distributed among the participating states. The Ohio Attorney General's Office, which was part of the settlement's executive committee, is expected to receive about $210,000.
More information about this settlement is available at the settlement administrator's website: www.MoneyGramSettlement.com.
Participating in the settlement were: 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, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia.
A copy of the settlement is available on the Ohio Attorney General's website.