Is MoneyGram up to its old tricks?

I won’t let go of MoneyGram.

On the one-year anniversary of the MoneyGram’s $18 million settlement with the Federal Trade Commission for its role in allowing gullible Americans to wire money to Canadian scammers, I went out and searched to see if it’s still happening.

It is.

Dave Lieber's Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong

I didn’t have to go far to find a victim. Only a few miles from Watchdog Nation HQ to find another victim of the Granny Scam who sent the money through MoneyGram, even though the company promises that it has cleaned up its act.

But first I must apologize to R. for passing on bad information. When a year ago, I first reported how MoneyGram had to pay $18 million back to customers who wired money to scammers, I attached an advice box to the column. (See last year’s video and Watchdog Nation report on MoneyGram here.)

The box stated, “If you were scammed in a MoneyGram wire transfer, here’s how you can apply for your part of the $18 million settlement.” I recommended calling MoneyGram and the Federal Trade Commission. That’s what MoneyGram and the FTC told me to tell readers at the time.

So R., who lives in Bedford, Texas followed my advice. A month before, he had received a letter telling him he won the Maple Leaf Lottery. His prize, he was advised, was $520,000! It made sense. He had traveled in Canada and entered a few contests. Now all he had to do was deposit the first prize check in his bank, then take that money and wire it to Canada for his taxes and fees so he could get the rest.

He did as told. A few days later, he got a note from his bank that the check was a counterfeit. He lost $4,000. (An embarrassed R. asks that he not be identified.)

My original notes from last year quote an FTC spokesman telling me, “We’ve got $18 million here, and that’s going to mean a bunch of money going back to defrauded consumers.”

Not to R.

“Nope,” he says. “Got nothing.”

After he filed complaints with MoneyGram and the FTC, he never heard back.

He asked for help, and I contacted MoneyGram on his behalf. A company spokeswoman verified that his claim was not included in the settlement because it came after the redress program had ended. Besides, R. had no proof that he faxed his complaint to MoneyGram in the first place. (Remember to get written or taped confirmation!)

An FTC spokesman tells me that the $18 million ran out almost immediately after the settlement was publicly announced.

“At that point, literally, both the FTC and MoneyGram were inundated with complaints from victims,” FTC’s Todd Kossow said.

If the new complaints had been added, “They would have diluted the pool,” he said.

He estimated that “the amount lost by consumers through fraud-induced money transfers using MoneyGram’s system likely was in the hundreds of millions of dollars for the years 2004 through 2008.”

R. wouldn’t have qualified anyway, Kossow explained, because, as MoneyGram stated, his transaction occurred after the qualifying period for settlements ended in 2008.

The government says 34,000 redress checks were mailed to victims — totaling $18 million. The average check was $520. But most victims lost a lot more than that in various scams in which money was wired to MoneyGram outlets in Canada.

The original FTC complaint accused MoneyGram of helping U.S. consumers transfer $84 million to scammers in this country and abroad. The FTC alleged that 10 percent of MoneyGram’s Canadian agents (134 employees) were involved in the scams as partners.

MoneyGram’s executives were warned and did nothing, the agency said. Company whistle-blowers were disciplined or fired. The FTC alleged that company leaders said fixing the problem was too costly.

At the time, MoneyGram announced that it would not fight the complaint to avoid “battling it out through a long and costly trial.”

Recently, MoneyGram spokeswoman Lori O’Briant told me the company has worked hard to beef up its anti-fraud efforts, including increasing fraud specialists on staff, using “a new multimillion dollar Fraud Prevention System that helps stop fraud before money is sent.” She said it also had built closer relationships with law enforcement agencies around the world, updated its money transfer forms to alert consumers of potential danger and improved its hiring practices.

So how’s that working?

Well, in September 2010, a 74-year-old Hurst, Texas woman was swindled out of $6,000 in “the granny scam” when she wired money to Canada thinking it was for her nephew. Hurst police tell me that $3,000 was wired through Western Union, and $3,000 was wired through MoneyGram.

R. says there’s really no policing to detect and punish those involved. “I even spoke to the Royal Canadian Mounted Police, and their attitude was, ‘We’ll be looking out for them. We know it’s happening, but it’s hard to catch them.'”

R. also filed a complaint with the U.S. Postal Inspection Service (his “winning” letter arrived in the mail). But nothing came of that, either. Service spokeswoman Amanda McMurrey says, “Typically, in these situations, there’s not much we can do except forward that on to the government of Canada.”

The best defense, she says, is to understand that a bank will deposit cash for a check into a person’s account in a few days, but if the bank later learns the check is a counterfeit, the account holder is responsible for repaying the money.

Requests for wire transfers are a telltale sign of a scam. Never wire money to anyone without double-checking the circumstances and individuals involved.

# # #

In fairness, Watchdog Nation wants to share MoneyGram’s response to the above in full:

“At MoneyGram, we take consumer fraud very seriously. Our ability to provide safe and reliable payment services for our consumers is critically important to our business.

“Over the last year, MoneyGram has renewed it commitment to preventing fraud. Measures undertaken by the company include:

  • Tripled anti-fraud staff
  • Intensified operational scrutiny of transactions with a new multi-million dollar Fraud Prevention System that helps stop fraud before money is sent
  • Expanded global outreach with law enforcement and regulatory agencies
  • Reporting to and communicating with FTC and partnering with other financial services providers, law enforcement agencies and industry councils to promote consumer awareness
  • Updated our money transfer send form to better educate customer and raise awareness of scams
  • Created new agent facing policy – enhanced requirements for applicants to become a MoneyGram agent, as well as enhanced agent education/training to mitigate fraud

“As a result of our actions, we have prevented more than $30 million dollars in fraud this year alone. In addition, fraudulent transactions sent from the United States to Canada have decreased by 75% since May (Canada has historically been one of the most active fraud corridors).

“Additionally, in order to protect and educate our customers we:

  • Post warnings on our website on various kinds of scams, as well as warn consumers that MoneyGram should not be used for Internet purchases
  • Clearly communicate and warn customers about possible fraudulent transactions on our money transfer forms – including asking if the customer is sending money for the purchase of a car, or rent an apartment, or claim a lottery, etc.
  • Provide training for agents to help spot possible fraudulent transactions
  • Clearly alert consumers to never send money to people they do not know
  • We ask customers who believe they have been a victim of fraud to contact us at 1-(800)-MoneyGram as well as report it to local police. We can then work with police and federal authorities who will further investigate the scam.”

Lori O’Briant
Corporate Communications & Media Relations Manager
MoneyGram International


Read the FTC’s Consumer Alert “Money Transfers Can Be Risky Business”


Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber

Dave Lieber book that won two national awards for social change.

VIDEO: 1 out of 10 of MoneyGram’s Canadian sales agents were crooks, FTC says

The $18 million settlement MoneyGram International has agreed to pay U.S. consumers who were tricked into transferring $84 million to the U.S. and Canada for fraudulent schemes is the tip of the iceberg. My video on this is here.

Worse, WatchdogNation believes, is the allegation leveled against MoneyGram by the Federal Trade Commission that 10 percent of MoneyGram’s Canadian agents (about 134 employees) were involved in the scams as willing partners.moneygram

But that’s not even the worst: MoneyGram executives were warned and did nothing. Company whistleblowers were disciplined or fired.

In damning language about the Minnesota-based company, the FTC states that MoneyGram “ignored warnings from law enforcement officials and even its own employees that widespread fraud was being conducted over its network, claiming that proposals to deal with the problem were too costly and were not the company’s responsibility.

“The company even discouraged its employees from enforcing its own fraud detection policies or taking action against suspicious or corrupt agents,” the FTC states. “Some employees who raised concerns were disciplined or fired.”ftc

During one month alone, the FTC says 8 out of 10 wire transfers through MoneyGram of $1,000 or more were fraudulent. You can read all the FTC’s legal documents here.

As first reported in the Dave Lieber column in the Nov. 6, 2009 Fort Worth Star-Telegram, the scams involved fake lotteries and sweepstakes, con jobs working as mystery shoppers, Internet  purchases, scams involving loans, e-mail, romance, employment ads and, one of the worst, the infamous grandparents scam where grandparents falsely believe they are wiring money to stranded grandchildren in Canada.

FTC spokesman Mitchell Katz says those scams are among the most evil because they prey on the elderly, many of whom already face financial troubles in tough economic times.

“They play on their emotions and financial insecurity to trick them out of their money, and that’s just not right,” Katz says. “That’s why we thought this was such a great case.”

The allegations against Minnesota-based MoneyGram go far deeper into the corporate culture than crooked agents.

FTC spokesman Katz tells The Watchdog: “Businesses have to keep in mind that you can’t just look the other way and pretend it’s not happening. You need to have a compliance program in place to make sure that the people working for you and doing your business are complying with the law.”

MoneyGram spokeswoman Lynda Michielutti released a statement:

“We don’t agree with the allegations made by the FTC. But we believed that it was in the best interest of our company and our consumers to put this matter behind us and focus our resources on delivering our valued service to consumers rather than battling it out through a long and costly trial.”

Some of the witnesses at that trial, undoubtedly would include, some of the 65 Canadian and U.S. employees of MoneyGram who already have been charged with crimes by law enforcement agencies in Canada and the U.S.

Under the settlement, MoneyGram must pay $18 million to victims and make the following changes:

– conduct background checks on all employees

– educate its employees on consumer fraud

– monitor its agents

– discipline those who break rules

– provide a clear fraud warning on its money transfer forms

– maintain a system for receiving consumer complaints that federal agents can periodically review. TIP

If you were scammed in a MoneyGram wire transfer, here’s how to apply for your part of the $18 million settlement:

1. File a written written complaint with MoneyGram. Contact them at 1-800-666-3947 to get started.

2. File a complaint with the Federal Trade Commission by visiting Web site or by calling toll-free 1-877-382-4357.

3. File a complaint with your state’s Attorney General.

Source: FTC

Don’t fall for it

Don’t wire money to:

– someone you don’t know

– someone claiming to be a relative in the midst of a crisis who wants to keep the transfer a secret

– someone who says a money transfer is the only form of payment accepted

– someone who asks you to deposit a check and send some of the money back

Source: FTC

What MoneyGram now tells customers:

On MoneyGram’s Web site, clear warnings are now issued that many of the reasons Americans were using the company’s service were fraudulent. This is worth reprinting in full from MoneyGram’s Web site:

Don’t Send Money to Strangers

MoneyGram never recommends sending money to a stranger. Any monies received by a stranger cannot be recovered and unfortunately you will not get your money refunded back to you.


Have you ever received a communication stating that you won something (money or a prize), but before you can collect you will need to send money to pay for taxes, customs, or any fees?  However, you didn’t actually buy a ticket or enter a sweepstakes. This is a SCAM.

Don’t send transfer money to the people who are stating you have “WON” something but need to send them funds before collecting your winnings. You will never have to pay money up front to receive any legitimate lottery or sweepstakes winnings

Internet Purchases

Have you found something online that interests you – a puppy, a car, an apartment for rent or any item for sale? Does the price for the item seem to be too good to be true and are you being asked to pay for the item through a MoneyGram money transfer?

Unfortunately, this is a SCAM.

Do not send money for the item to the seller. They may even send you a letter or e-mail of authentication telling you that you have purchased the item but need to wire funds first. Do not send the money. It is a SCAM. You will receive no merchandise. Once money is wired and received it cannot be recovered and unfortunately you will be at loss for any money transferred.

Loan Scams

Did you receive an e-mail or mailing about getting a loan? Were you asked to send money for loan fees, taxes, service fees, advance payments or any other reason? This is a SCAM.

Do not send money to a loan company to obtain a loan.  If the money is wired and received it can not be recovered. You will be at a loss for the money you have sent.

Checks/Money Orders in the Mail

Have you received a check or money order in the mail with instructions to first cash it at your bank and then send some of the funds to someone else through a MoneyGram money transfer? If so, the check/ money order is counterfeit and your bank will make you cover the loss.

Be aware that counterfeit checks are very hard to identify. You may have been promised a percentage of the check for employment or because of an over payment. This is a SCAM. Do not send the money and do not cash the check

E-mail Scams

Have you received a random e-mail from someone who needs help getting money back into the United States?  They may claim to be ill or inheriting a company and asking you to help them by wiring money – Do not send money to this person as this is a scam. Any money sent to the stranger will be lost and you will not get a refund.

Did you receive an e-mail from MoneyGram? The only time you will ever receive an e-mail from MoneyGram is if you sent money through If you receive an e-mail stating that a payment/or funds have been sent to you, and you didn’t use eMoney Transfer, the e-mail is fraudulent.

Romance Scams

Did you meet someone through a personal ad, e-mail, chat room or an instant message? Did they ask you to send them money for travel or to help them financially? Do not wire the money – This is a SCAM. Any money received by this person cannot be recovered and you will be at loss for any money sent.

Newspaper Ads

Have you found something for sale in the classifieds or any type of newspaper ad? Did they ask you to pay for the item through a MoneyGram money transfer? This is a SCAM.

Do not use a money transfer to purchase an item from a stranger. It is not safe to use a money transfer service when trying to purchase an item

Grandparent/Relative Scam

Did you receive a phone call from a grandchild or a family member? Are they in despair because they have been detained in Canada for not having a fishing license or for catching a protected species of fish? Have they been in a car accident? Are they asking for money to pay fines or for car repair? Did a relative call because they need money for a family member in medical need or for medicine? THIS IS A SCAM! Use precaution when sending money in this situation. These callers can request that you send money anywhere in the world. If you cannot verify with your family member that they are requesting the money and aren’t sure about the transaction, do not send the money. You will be at a loss for any money that is sent.

Finally, here is the latest FTC consumer alert on money transfer scams.

You can learn more about the latest scams and ways to protect yourself in the groundbreaking book by the author called Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, winner of two national book awards in 2009 for Social Change.

Self-regulation of online spying by the spies? Oh, please!

Have you heard of online behavioral advertising?

That’s Web sites tracking your online activities, including your searches, and delivering advertising to you based on your interests. For now, the practice is unregulated by the federal government, and companies are supposed to regulate themselves.

But the government and privacy experts are scrutinizing this growing practice in light of privacy concerns. They say they worry most about use of sensitive information regarding finance, children’s privacy, health and Social Security numbers.

A Federal Trade Commission report says a company engaged in the practice must provide “clear and prominent notice” to consumers that it tracks Web habits to match related advertising. The report says such alerts are often posted in lengthy and difficult-to-understand notices.

Companies need to create effective disclosure statements separate from privacy policies, the report says. It also says companies should let consumers opt out of behavioral advertising.