MoneyGram Scammed Us

November 6th, 2009. By janem

Back in July Pleading Ignorance looked at Moneygram and its involvement, if any, to consumer fraud. We really did plead ignorance because it turns out that Moneygram isn’t the reputable company we believed it to be. Although we weren’t scammed financially as   countless unfortunate US consumers were, “The wool got pulled over our eyes”, as the old saying goes.

The FTC recently charged that the second-largest money transfer service in the US allowed its money transfer system to be used by fraudulent telemarketers to bilk consumers out of tens of millions of dollars. And it has to pay the FTC a hefty $18 million to compensate consumers.

That sounds like a lot of dough, but it’s a measly amount to pay back, considering that many consumers likely didn’t report a loss. And a recent FTC survey reported almost 80 percent of all MoneyGram transfers of $1,000 or more from the US to Canada over a four-month period in 2007 were fraud-induced.

And if that’s not enough to make you shake your head, MoneyGram itself received more than 20,600 fraud complaints that cost consumers more than $44 million to cross-border money-transfer frauds between 2004 and 2008 alone. Combine that with losses reported by U.S. consumers on money transfers within the US and that number almost doubles to a whopping $84 million! Cha-ching!

According to the FTC, MoneyGram knew that its network has been used over the last few years by telemarketing scammers to prey on US consumers. And worse, some MoneyGram agents were also scam artists but the money transfer service more or less turned a blind eye. Big mistake: the FTC had MoneyGram in its eagle eye.

This is how the scam works. Con artists prefer to use money transfer services because they can pick up transferred money immediately, the payments are often untraceable, and unknowing consumers can’t do anything about it. Until now, that is.

The FTC has a new Consumer Alert, available on its website, titled “Money Transfers Can Be Risky Business.” And consumers interested in the process of redress administration should call 1-202-326-3755.

Tags: Consumer Fraud, moneygram class action, Moneygram Scam

This was posted on Friday, November 6th, 2009 at 6:23 pm and is filed under Class Action . Feel free to respond, or trackback. Read our comments policy.