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AG Schmidt: Wire transfer company required to improve efforts to identify, prevent fraudulent money transfers

Release Date: Feb 15, 2016

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TOPEKA – (February 15, 2016) – A settlement reached last week will require a national wire transfer company to change its business practices to make it harder for defrauded consumers to wire money to scammers, Kansas Attorney General Derek Schmidt announced.

Schmidt, along with the attorneys general of 48 other states and the District of Columbia, reached the agreement with MoneyGram Payment Systems, Inc. The settlement was the result of a multistate investigation into complaints from consumers who used MoneyGram’s wire transfer service to send money to third parties who were involved in schemes to defraud consumers.

“Con artists use a wide variety of schemes to trick consumers into wiring them money,” Schmidt said. “These range from the heartless ‘grandparent or relative in distress’ scam to lottery and contest scams in which consumers are told they have won a large sum of money but must first wire money to pay required taxes or fees before receiving their winnings. Consumers who receive solicitations from strangers promising big winnings should toss those letters in the trash, delete the e-mail or hang up the phone. And consumers who are contacted about a grandchild, friend or family member in distress should reach out separately to the friend or family members to independently verify that the relative is actually in need of assistance.”

Schmidt noted that con artists often target senior citizens and vulnerable consumers with a nearly unlimited variety of scams, but a common feature often is asking the consumer to send the money by wire transfer.

"The con artists know that once the money is wired offshore, it becomes very, very difficult to get it back," Schmidt said. "So this settlement is focused on making sure this wire transfer company is watching out for its vulnerable customers and taking reasonable steps to identify and prevent fraud-induced wire transfers before they are sent."

Under the settlement agreement, MoneyGram has agreed to maintain and continue to improve a comprehensive and robust anti-fraud compliance program designed to prevent its systems from being used for fraud. Part of the company's renewed effort will focus on providing more warnings to consumers and improving training for the company's agents to help them identify requested transfers that likely are induced by fraud. Restitution payments will be made to identified consumers who previously filed complaints with MoneyGram related to fraud induced money transfers and have not already received payment.

The settlement provides for a third party administrator who will review MoneyGram records and send notices regarding restitution to all consumers who are eligible to receive restitution under this settlement. Generally, consumers who are eligible for restitution previously filed complaints with MoneyGram between July 1, 2008, and August 31, 2009, regarding fraud induced transfers sent from the U.S. to foreign countries other than Canada.

Kansas consumers who wish to learn more about this settlement may visit the attorney general’s consumer protection website at or call (800) 432-2310.

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