MoneyGram International will have to pay 18 million dollars to consumers who were scammed by fraudulent groups posing as telemarketers or agents for MoneyGram. MoneyGram received the punishment because of their unwillingness to take action about the scheme while they were aware that it was happening. Also, some MoneyGram’s agents even participated in the scheme to defraud their own customers.
From 2004 to 2008, fraudulent MoneyGram agents were able to convince US citizens to wire more than $84 million dollars in the United States and Canada. Money was transferred through Western Union and MoneyGram. The money can not be refunded or even traced once the transaction takes place.
According to the FTC, 79% of MoneyGram transactions that were over $1,000 in the United States and Canada in a four month period in 2007 were fraudulent transactions.
The scheme to defraud consumers included consumers receiving phone calls that they won the lottery. To receive their earnings, the consumer had to wire money to pay for taxes or customs. MoneyGram was charged with abetting to the fraud because they ignored warnings and complaints from their own employees, as well as from law enforcement officers.
MoneyGram will now have to pay back some of the money to their customers who were scammed. They are now required to perform background checks on their agents and employees. MoneyGram will also provide fraud warnings on the front of their transfer forms.
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