DALLAS (UPI) —
MoneyGram International agreed Thursday to pay $125 million to settle claims it failed to prevent fraudulent money transfers.
That settlement amount is part of the company’s 2012 deferred prosecution agreement
with the Department of Justice and an order from the Federal Trade Commission
In 2012, MoneyGram, the Justice Department said, failed to live up to a deferred prosecution agreement requiring the Dallas-based global money services business to to provide adequate anti-fraud and anti-money laundering programs
The 2012 agreement also required MoneyGram to retain a corporate monitor to report regularly to the Justice Department for the next five years.
That agreement came about after MoneyGram breached a FTC order from 2009.
The order required MoneyGram to perform timely fraud investigations for any location that received two or more complaints of fraud inside of 30 days or received fraud complaints of at least 5 percent or more of that location’s monthly transactions. It also needed to close down any locations involved in “fraud-induced” transfers.
“The FTC’s 2009 order required MoneyGram to protect consumers from fraud through its money transfer system, and today we are holding MoneyGram accountable for its failure to do so,” FTC Chairman Joe Simons said in a statement
. “MoneyGram’s alleged failure to implement key provisions of the order allowed scammers to continue to use its money transfer system to rip off consumers.”
Between 2004 and 2009, MoneyGram collected fees and other money from transactions carried out by its own agents it knew had involvement in international money fraud schemes. The schemes targeted the elderly and other vulnerable groups by falsely posing as relatives in need of money, promising large cash prizes or offering Internet sales at greatly discounted prices. The agents directed the victims to send funds through MoneyGram’s money transfer system.
MoneyGram also agreed to stop reported fraud receivers and senders from using its money transfer system within two days of receiving a complaint about those individuals. The company must require anyone sending or receiving money in any country to show government-issued identification.
It also must monitor all U.S. originated transfers, and fire or restrict agents who process a high number of transactions by a reported fraud receiver or sender.
MoneyGram said it has invested more than $100 million in compliance technology and agent training programs to help stop fraud, The Wall Street Journal reported
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