MoneyGram fined $18M for cross-border fraud
Abbotsford, B.C., man lost thousands in one scam.
Last Updated: Wednesday, November 4, 2009 | 2:07 PM ET
CBC News
At least 65 of MoneyGram's Canadian agents have been charged or are under investigation in alleged fraudulent activity totalling $84 million US in North America, said the U.S. Federal Trade Commission.
Last month, the FTC fined Moneygram International Inc. a total of $18 million, saying the money-transfer company knew its system was being used to defraud people but did nothing to stop it.
In fact, the FTC found in some cases that MoneyGram, based in Minneapolis, fired or disciplined employees who raised concerns.
About $44 million of the $84 million is alleged to have involved Canadian agents who solicited consumers to send them deposits via MoneyGram for lottery, guaranteed loans and other schemes.
"In this case, MoneyGram not only ducked this responsibility, but also looked the other way while its agents took part in the scams," David Vladeck, director of the FTC’s Bureau of Consumer Protection, said in a news release.
Seventy-nine per cent of all MoneyGram transfers of $1,000 or more that were transferred to Canada from the U.S. over a four-month period in 2007 were fraud-induced, according to a recent FTC survey.
The commission said in its complaint that MoneyGram knew or turned a blind eye to the fact that about 131 of its 1,200 agents in Canada and the U.S. accounted for more than 95 per cent of fraud complaints it received in 2008 regarding money transfers to Canada.
The same number of agents were responsible for more than 96 per cent of fraud complaints to the company in 2006.
U.S. consumers lost at least $44 million to Canada-U.S. money-transfer frauds between 2004 and 2008, a period when MoneyGram received at least 20,600 fraud camplaints.
Lured by so-called wins
The most prevalent scams were lottery or prize schemes in which consumers were told they had won thousands of dollars and just had to pay a fee for taxes, customs or insurance to collect their winnings.
In another scheme, telemarketers told consumers they were guaranteed loans, regardless of their credit score. All they had to do was pay insurance, paperwork or processing fees to complete the transaction.
That’s what happened to Floyd Girouard, a trucker from Abbotsford, B.C., who turned to an online loan company when his bank turned him down. He qualified for a $30,000 loan but was told he first had to wire a $3,000 deposit to get the money, which he did.
In March, the CBC's Marketplace investigated his complaint and learned Girouard had fallen for a scam called advance fee loan fraud. Last year, Canadians were bilked out of an estimated $60 million using this scheme.
Yet another scam highlighted in the FTC complaint involved mystery shoppers.
U.S. consumers were contacted by phone, direct mail or email, and told a firm was hiring people to visit stores such as Wal-Mart to evaluate MoneyGram money transfer operations. The con artist would send consumers a cashier’s cheque, telling them to deposit it in their chequing account and then send most of the money back using a money transfer at Wal-Mart.
Ultimately, the counterfeit cheques would bounce and the consumer would be out the money sent from their account.
The FTC’s complaint alleges MoneyGram ignored warnings from law enforcement officials and even its own employees about fraud over its network.
The FTC did not accept MoneyGram's response that the fraud was not the company’s responsibility.
