Telegram to MoneyGram: Stop the Scam. and pay. again.

If you run a business that provides a way for people to send money to other people, you may want to pay attention to whether your service caters to scammers. This is an important message because for years money transfers have been the payment method of choice for scammers who know they can take the cash and disappear. and it’Some companies clearly need to hear this twice.

As early as 2009, FTC sues MoneyGram Failure to resolve remittance issues caused by fraud in its system. It’s a massive system: MoneyGram serves consumers around the world through a network of agent outlets (currently numbering about 350,000). And there was massive fraud: From 2004 to 2008, consumers lost more than $84 million. The FTC alleges that MoneyGram knew its systems were being used for fraud but did little about it, and that some agents actually participated in the fraud.

In 2017, we filed a lawsuit against MoneyGram’s main competitor, Western Unionthe company paid $586 million to settle very similar allegations.

In 2018, we dragged MoneyGram back into the fold again, this time for failing to live up to the 2009 agreement. The settlement requires MoneyGram to strengthen its anti-fraud measures, such as: (1) implementing a comprehensive anti-fraud program to protect consumers; (2) conducting due diligence on potential agents; (3) conducting investigation on problematic agents Investigate and, if appropriate, impose discipline or termination; (4) Share consumer complaints with the Federal Trade Commission.

MoneyGram failed to do which of the following Fully completed? The Federal Trade Commission says all of this is true. As a result, scammers continue to exploit MoneyGram’s systems to collect millions of dollars from victims. You can read more about this in the FTC’s new court filing, but here are some clear examples:

• Its electronic system used to detect and block transfers caused by fraud has suffered from severe technical problems for a year and a half, leading to greater losses for consumers.
• An agent hired by the company was fired by Western Union for his role in sending money transfers triggered by the fraud.
• It failed to properly investigate or discipline agents responsible for numerous fraud complaints. In fact, MoneyGram has different standards for when to take disciplinary action against large “chain” agents with 10 or more locations, allowing the company to focus disciplinary action on smaller “mom and pop” agents. superior.
• It does not record all consumer complaints it receives, nor does it share all complaints it records with the Federal Trade Commission.

Even without a sophisticated and fully operational anti-fraud system, fraud in MoneyGram’s system cannot be completely hidden from view. FTC court filings state “[i]MoneyGram’s own records contain information that suggests the company has been aware of a significant amount of fraudulent and suspicious activity involving specific agents for several years. “ Annual Consumer Fraud Complaints Filed with MoneyGram more than doubled Between 2012 and 2016.The complaints are also highly concentrated: less than 4% of MoneyGram agents have received five or more fraud complaints over the past five-plus years, but these agents accounted for More than 84% All fraud complaints.

Now, MoneyGram has pledged in a revised order to address its shortcomings and improve its anti-fraud program. It will need to block transfers from known fraudsters and provide people with refunds when agents fail to follow applicable policies and procedures. It will also pay $125 million in refunds to consumers who used MoneyGram to pay scammers. (We should note that in this and past lawsuits against Western Union, the Justice Department also joined the FTC in settling parallel criminal proceedings.)

When people send money using money transfer services like MoneyGram or Western Union, it’s not free. The sender pays the company a fee each time. Therefore, the more people use the service, the more money the company makes. this is necessary. But when the company turns a blind eye while the service is being used to commit fraud, while continuing to collect fees from these illegal transfers, that’s a problem.

Are there more general conclusions that can be drawn from this case? If you know that your company’s services are being used to defraud consumers, it’s not just their problem. This is not just a government problem. is yours.