Illinois Attorney General Lisa Madigan announced a $13 million settlement with Dallas-based wire service Moneygram earlier this month, concluding an investigation into fraudulent wire transfers.
The settlement includes 49 states and the District of Columbia with Illinois receiving $375,000 of the $13 million payout. The money will be used to cover costs and fees the state incurred as well as a consumer restitution program. The settlement also provides for stricter employee guidelines and fraud prevention measures.
“This is a civil action, and the goal is to establish procedures to protect consumers who might be a victim of a scam artist," said Madigan spokesperson Annie Thompson. "We know fraudulently induced wire transfers are a serious ongoing threat to vulnerable consumers,”
Scam artists used a wide variety of tactics to get users to wire them funds. Some Moneygram consumers were contacted by a third party promising big winnings from lottery or contest payouts while others were asked to cash counterfeit checks. The scammers also made phone calls and sent emails requesting money for the victim’s family member who was said to be in legal or medical trouble.
“Once the victim sends the money, it is generally extremely difficult, if not impossible, to get the money back from the scam artists," Thompson said. "For that reason, we have focused our efforts on identifying fraudulently induced transfers on the front end, before the money has been picked up."
In an effort to prevent and detect fraudulent wire transfers, Moneygram agreed to implement a number of stricter company policies. Mandatory training will be required for agents; and employees who fail to take measures to reduce fraudulent wire transfers will be suspended or terminated. In addition, more stringent monitoring policies will be put into place.
“Moneygram will be monitoring wire transfers particularly in high-risk corridors, such as Jamaica," Thompson said. "When they do see a potential for fraud-induced transfers, they
will block the transfer until they can confirm its authenticity with the
This process is referred to as the Anti-Fraud Alert System (AFAS) and will continue to be enhanced and strengthened. An online system will be implemented for employees to report noncompliance with these improved anti-fraud guidelines.
Consumers who filed complaints of fraud with Moneygram between July 1, 2008, and Aug. 31, 2009, are eligible for restitution. An administrator will be reviewing the complaints and sending notices.
“Beware of unsolicited requests from strangers asking you to wire money in return for a big payday, which is the hallmark of a scam,” Illinois Attorney General Lisa Madigan said in a press release. “Immediately hang up the phone, throw the letter in the trash or delete the email, and report the contact to my Consumer Fraud Bureau so we can alert others to these scams.”