The big news this week is that MoneyGram has agreed to forfeit $100 million to settle charges that it aided wire fraud and failed to police against money-laundering. (Reuters) This news crossed my desk from a few clients who had previously used MoneyGram in connection with Pay Day Loans and found that the money the supposedly sent had not received the recipient and had disappeared.
In connection with its settlement, the U.S. Department of Justice says that MoneyGram processed thousands of transactions that were used by their own agents to trick people into wiring money to people they believed to be their relatives or with the promise of large cash prizes. The settlement money will be used to create a fund from which victims of the scams can be repaid.
Across the past months, many of my meetings with those who have been the victim of Pay Day Loan scandals have involved companies demanding payment through services like MoneyGram where there was not a truly “traceable” receipt of the money. The companies, who are often scammers located overseas, demand payment by a money-wiring service and won’t accept a check or other payment method that would be traceable. If you refuse to use their companies, they immediately threaten you that you will be arrested if you do not use their service and pay the money. Of course, once you’ve made the payment, you do not hear from them again and never receive any confirmation that the payment was actually made.
With this settlement, hopefully another way to scam people is being closed down, but at the same time, these scammers will often just move on to another scam to get their money.