For Immediate Release
Media Contact: Bob Cooper
(208) 334-4112

Date: July 2, 2008

MoneyGram Payment Systems, Inc., Settles with Wasden

(Boise) - MoneyGram Payment Systems, Inc., entered into a settlement agreement with Idaho responding to concerns about scam artists’ use of the company’s wire transfer services, Attorney General Lawrence Wasden announced today. MoneyGram will also fund a $1.1 million national consumer awareness program and include prominent warnings on the forms that consumers complete to wire money.

“My office continues to receive reports from consumers who mistakenly wire money to fraudulent telemarketers, Internet retailers and other fraudsters,” Attorney General Wasden said. “I commend MoneyGram for taking the necessary steps to help prevent criminals from using traditional money transfer methods to scam consumers.”

An increasingly common scam involves advanced fee loans. This occurs when a loan broker, who usually is located outside the United States, requires a borrower to pay an insurance fee in order to receive a loan. The victim is directed to wire the fee because wire transfers are quick and funds can be picked up in multiple locations.

“The consumer, who often is desperate to obtain the loan, pays the broker $7,500 for a $20,000 loan,” Attorney General Wasden explained. “Not only does the consumer not get the loan, he or she is also out $7,500.”

Additional terms of the settlement agreement with MoneyGram include:

  1. Prominent warnings of the dangers of fraud-induced wire transfers must appear in English and Spanish on the front page of MoneyGram’s Send Form, and comparable warnings are required for telephone and Web transfers. The warning is to occupy at least 40 percent of the area of the Send Form’s front page.
  2. MoneyGram will continue its policy of reimbursing the amount of any transfer to a consumer who, prior to pickup, requests that the transfer be stopped. MoneyGram must also reimburse transfer fees if the consumer reasonably claims that the transfer was fraud-induced.
  3. MoneyGram will send prominent anti-fraud messages to its agents electronically every month or whenever a proposed transfer exceeds a certain amount. The company must also revise and enhance its agent anti-fraud training programs and provide special training to agents with elevated fraud levels at their locations.
  4. MoneyGram will take appropriate action to suspend or terminate agent locations that are involved in fraud or that do not take reasonable steps to reduce fraud.
  5. MoneyGram will block wire transfers from specific consumers or to specific recipients when the company receives information from a state that there are grounds to believe that fraud will occur. The block will remain in place until such time as the consumer is counseled on fraud and requests resumption of the transfer.
  6. MoneyGram will ensure that money transfers sent from the United States may only be picked up in the country designated by the sender.

“It is imperative that consumers exercise caution when they send money orders,” Attorney General Wasden said. “Never wire money to an unknown person no matter how trustworthy you think he or she is.”

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