"While we don't agree with the FTC`s allegations regarding our fraud prevention in the past, we can agree on fraud prevention today and in the future," said Patsley. "We don`t want our customers being victimized by third-party fraud. What we are announcing today with the FTC is our commitment to enhance our already comprehensive efforts to combat fraud and ensure our customers can continue to rely on MoneyGram for safe, reliable money transfer services."
But check out these specific allegations from the FTC's press release, which also came out today (emphasis ours):
The FTC charged that between 2004 and 2008, MoneyGram agents helped fraudulent telemarketers and other con artists who tricked U.S. consumers into wiring more than $84 million within the United States and to Canada – after these consumers were falsely told they had won a lottery, were hired for a secret shopper program, or were guaranteed loans. The $84 million in losses is based on consumer complaints to MoneyGram – actual consumer losses likely are much higher.
The FTC charged that MoneyGram knew that its system was being used to defraud people but did very little about it, and that in some cases its agents in Canada actually participated in these schemes. According to the FTC's complaint, MoneyGram knew, or avoided knowing, that about 131 of its more than 1,200 agents accounted for more than 95 percent of the fraud complaints it received in 2008 regarding money transfers to Canada; a similarly small number of agents was responsible for more than 96 percent of all fraud complaints to the company in 2006.
[...]
According to a recent FTC survey cited in the complaint, at least 79 percent of all MoneyGram transfers of $1,000 or more from the United States to Canada over a four-month period in 2007 were fraud-induced. The Commission's complaint further stated that based on the more than 20,600 fraud complaints MoneyGram itself received, U.S. consumers lost more than $44 million to cross-border money-transfer frauds between 2004 and 2008 alone. When combined with losses reported by U.S. consumers on money transfers within the United States, that number grows to $84 million.
[...]
The FTC's complaint alleges that MoneyGram ignored warnings from law enforcement officials and even its own employees that widespread fraud was being conducted over its network, claiming that proposals to deal with the problem were too costly and were not the company's responsibility. The company even discouraged its employees from enforcing its own fraud prevention policies or taking action against suspicious or corrupt agents. Some employees who raised concerns were disciplined or fired, the FTC charged.
Wow, that sure doesn't sound like MoneyGram gives a hoot about its customers. They say, "Ensuring safe and reliable money transfers for our customers all over the world is at the forefront of all we do." Except for that estimated $84 million, we guess.
"MoneyGram International Reaches Agreement with FTC" [Reuters]
"MoneyGram to Pay $18 Million to Settle FTC Charges That it Allowed its Money Transfer System To Be Used for Fraud" [FTC]
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"Money Transfers Can Be Risky Business" [FTC]
(Photo: renaissancechambara)
No, some people just don't have or want their bank accounts connected. My bank account is still connected to my mom's (hmm, maybe I need to think on that) but when I need some money from Dad, he wires it Western Union. My parents have separate bank accounts and sometimes it's easier for daddy's little girl to loosen the grip on his wallet than it is to get some assistance from mom. Especially since he's the one with most of the moola.
]]>They're at fault because they saw that their organization had a serious internal problem and didn't do anything to stop the fraud from happening because they were making money on it.
]]>Was the FTC the defrauded ones here?
]]>I would expect MoneyGram to at least provide this level of service. They should educate their employees on what to look for and when to warn customers. Maybe they could hang up a few posters explaining common scams (as I'm sure sport/concert tickets are at the top of the list).
Statistically, it looks like agents were involved in scams, but it could just be that they were so incompetent that they let obvious fraud happen under their noses. Either way, MoneyGram should be at least partially responsible.
]]>@prag: My brother's in prison. It's the easiest way to get money to his account.
]]>Hours are just the tip of the iceberg - my bank actually only does wire transfers if you're a business account. Otherwise, they figure that your emergency transfer can be done via ACH transfer which is 2-days.
I imagine your mom had direct access to your bank account.
Now imagine she didn't and you were in different states under different banking systems.
WesternUnion also does QuickCollect which is a way for regular people to instantly wire money to all sorts of legitimate lenders/utilities/landlords when they need to avoid repossession/turnoffs/eviction. Since it can be done over the phone, no one needs to worry about trips to offices, gathering of cash or failures to show up by 5PM.
And, if you're studying abroad or backpacking through Europe and you suddenly need cash from Mom & Dad - this is a service that exists. Or if you're one of millions of exchange students getting money from home.
Oh - and if you're a prisoner in need of cash at the commissary. Well, they help your family deposit money into your account.
]]>@pecan 3.14159265: A lot of legitimate money wiring happens between immigrants working in the US and their families back home. I can only imagine that depositing cash in another person's foreign bank account is difficult, if not impossible. And that assumes the recipient has a bank account in the first place.
Even within the US, not all banks are national banks. I lived in DC for a while, and my bank doesn't have any branches their. Everytime I wanted to deposit a check I had to mail it halfway across the country. So it would take about 5 days for said check to show up in my account.
]]>Why Western Union is an Angel...
During Katrina, my father's workplace, which employed about 6000 people in New Orleans, had their employees blown to the four corners of the Earth.
His company, during a six week shutdown, was able to wire their workers paychecks, (and, thankfully, additional money during the shoutdown) no matter where they were in the U.S.
...and why they should be condemned to hell...
I, unfortunately, have a few 'sucker's bets' credit cards, that won't accept over-the-phone payments by check, but will accept over-the-phone WU payments, which they proudly state a $15 or so fee, which they admit to splitting that fee between WU and Mr. Shady Bank (probably more the Credit Card Co's fault here, but that's about all I got to contribute to the witchhunt)
]]>@Whiskey Tango Foxtrot (now with less Monster Energy!): The concept of wiring money is entirely foreign to me. My mom has never wired me money. If I needed emergency money, she deposited the funds into my bank account.
Is it that wiring services are open longer than banks?
]]>@prag: Not always. When I worked for Sprint, if you didn't want to use credit, MoneyGram was what we reccommended.
Oh, wait. Never mind, you're right.
]]>FTA: "in some cases its agents in Canada actually participated in these schemes"
You would appear to be correct.
]]>@Parnassus: Because you're not promising them that they'll get rich.
]]>(pardon my grammar, it is getting late.)
]]>I thought about this as well, but let's set aside that for a moment. What they are clearly responsible for is that their employees are not engaged in criminal activity. From the FTC release, it appears that the company did little or nothing to investigate employees that statistically and improbably accounting for nearly all the fraudulent activity.
The FTC's complaint alleges that MoneyGram ignored warnings from law enforcement officials and even its own employees that widespread fraud was being conducted over its network...The company even discouraged its employees from enforcing its own fraud prevention policies or taking action against suspicious or corrupt agents.
As for their responsibility if it wasn't their employees, then that's a good question. That depends on the statutes covering their type of financial transactions.
]]>"If they aren't actually doing the defrauding, why should they be held responsible?"
I thought about this as well, but let's set aside that for a moment. What they are clearly responsible for is that their employees are not engaged in criminal activity. From the FTC release, it appears that the company did little or nothing to investigate employees that statistically and improbably accounting for nearly all the fraudulent activity.
The FTC's complaint alleges that MoneyGram ignored warnings from law enforcement officials and even its own employees that widespread fraud was being conducted over its network...The company even discouraged its employees from enforcing its own fraud prevention policies or taking action against suspicious or corrupt agents./i>
As for their responsibility if it wasn't their employees, then that's a good question. That depends on the statutes covering their type of financial transactions.
]]>... And possibly:
"The FTC's complaint alleges that MoneyGram ignored warnings from law enforcement officials and even its own employees that widespread fraud was being conducted over its network, claiming that proposals to deal with the problem were too costly and were not the company's responsibility. The company even discouraged its employees from enforcing its own fraud prevention policies or taking action against suspicious or corrupt agents. Some employees who raised concerns were disciplined or fired, the FTC charged."
It's all there in black and white. They knew that employees were conducting in fraudulant activity and did nothing about it. Also, when a vast majority of your business is fraud, then you are directly responsible for it.
Greed and cover ups never work for companies in the long run, and are only done by short sided fools who have no interest in the well being of any of their customers.
]]>Perhaps you're speaking to fees charged?
]]>"Give us your money and we'll ensure that it SAFELY gets to the person you want us to send it to,"
You kinda proved the point.
IT IS Moneygrams responsibility to make sure the person on the other end isnt a con-artist. Its not hard to check this fact, but it does mean costing money the company could be making which is why they chose to look the other way.
Realistically Moneygram knows if this went to court they would have to pay back the full amount, because they where knowingly a party to fraud. What I really want to know is why the government was so easy to cave.
]]>Further, I think the term "safe" was probably meant "Give us your money and we'll ensure that it SAFELY gets to the person you want us to send it to," not "we'll make sure the person you're sending this to is not a con artist."
]]>OMG that is f--ked up!
]]>-that was program, not origram..
]]>Shouldn't this money go to the financial institutions who had to take losses on the items that the consumers disputed? Up until mid 2008, Western Union was "Verified by Visa" which protected them from chargebacks for fraud (unless of course the cusotmer's bank was enrolled in the "Verified by Visa" origram, which most are not).
]]>SING ALONG WITH ME!
Everybody needs somebody sometime...
]]>It's much more difficult to talk people OUT of being defrauded than it was to talk them INTO it in the first place.
]]>On the other hand, if someone on eBay or some email asks you to pay something via Western Union or Moneygram, I'd say 99% of the time is fraud.
]]>