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Attorney General Announces $1.2 Million Settlement With Moneygram
CONTACT: Elliot Burg, Assistant Attorney General, (802) 828-5507
July 2, 2009 - In a settlement that will help protect consumers in Vermont and elsewhere from scams that try to trick them into wiring money to the scammers, MoneyGram Payment Systems, Inc., has signed an Assurance of Voluntary Compliance (AVC) with Vermont and 43 other States and the District of Columbia, under which the company will fund a $1.1 million national consumer awareness program, pay the negotiating states $150,000, and set out very prominent consumer warnings on the forms used by consumers to wire money. The AVC was filed in Washington Superior Court in Montpelier today, according to Vermont Attorney General William H. Sorrell.
MoneyGram, based in Minneapolis, offers money transfer services by wire at over 25,000 locations in the United States and over 100,000 locations around the world, including grocery stores, gas stations and other retail businesses.
The problem addressed by the AVC is the high number of “fraud-induced transfers”—that is, money wired by consumers to fraudulent telemarketers and other scam artists. For example, some telemarketers, often based in other countries, use a “lottery” scam, in which they tell vulnerable consumers they have won a large sum of money but must pay taxes or other charges in order to claim the winnings. The victims are then directed to send the money by wire, because wire transfers are fast, there are transfer agents in most communities, and funds can be picked up in multiple locations.
The problem of fraud-induced transfers is substantial. In 2003, a survey conducted by seven states of transfers over $300 to Canada by another major money transfer company estimated that over 29 percent of those transfers were fraud-induced, resulting in national consumer losses in the year 2002 of approximately $113 million.
Among the terms of the AVC just reached with MoneyGram are these:
Commenting on the AVC, Attorney General Sorrell noted the importance of enlisting “third parties” like MoneyGram in the campaign against consumer fraud. “To keep perpetrators from defrauding consumers, we need to make it harder for them to utilize traditional methods of transferring money,” said General Sorrell. “Agreements like this one with MoneyGram—with its model fraud warning, consumer education program, and enhanced training for money transfer agents—are steps in the right direction.”
Signing the AVC were the States of Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia and Wyoming, and the District of Columbia.
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