Hawai‘i Part of Multi-State MoneyGram Settlement

The State of Hawai‘i Office of Consumer Protection announced a settlement with Dallas-based MoneyGram Payment Systems Inc. resolving a multi-state investigation that focused on consumer complaints by those who used MoneyGram’s wire transfer service to send money to third parties involved in schemes to defraud consumers.

In addition to Hawai‘i, 48 states and the District of Columbia participated in this settlement. Only California declined to participate in the settlement.

“We believe that this settlement will help to protect vulnerable consumers from wire fraud,” OCP Executive Director Stephen Levins said today. “Crooks routinely use wire transfers to con unwary consumers out of their money. Anytime someone insists that a money wire is the only method to transfer funds to them, red flags should go up, especially if it involves a lottery or sweepstakes. No one should ever wire money to claim a prize. If you do, you’ve been scammed and you’ll never see your money again.”

The settlement has two main components. First, MoneyGram has agreed to maintain and continue to improve a comprehensive and robust anti-fraud program designed to help detect fraud and prevent consumers from suffering financial losses as a result of these types of fraud induced wire transfers.

The program must be documented in writing and at a minimum, must include the following elements:

• Mandatory and documented compliance training for agents and guidelines regarding when an agent’s conduct warrants suspension or termination;
• Suspension or termination of agents who fail to take commercially reasonable steps to reduce fraud induced money transfers;
• A hotline system—telephonic and electronic—where employees and agents can report noncompliance with anti-fraud measures;
• Sound mechanisms to evaluate actual fraud rates and consumer losses from fraud induced money transfers in order to utilize that information to improve compliance; and
• Continued enhancement of technology solutions, including its Anti-Fraud Alert System.

Second, MoneyGram has agreed to pay a total of $13 million to the states to fund a nationwide consumer restitution program and for the states’ costs and fees. Hawai‘i’s portion of the settlement will be $85,000.

The settlement provides for an independent third-party settlement administrator who will review MoneyGram records and send notices regarding restitution to all consumers who are eligible to receive it under this settlement.

Generally, consumers who are eligible for restitution previously filed complaints with MoneyGram between July 1, 2008, and Aug. 31, 2009, regarding fraud induced transfers sent from the US to foreign countries other than Canada.

More information about this settlement is available at the settlement administrator’s website.