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Multistate settlement with MoneyGram to result in restitution

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Delaware, along with 49 states and the District of Columbia, have reached a settlement with MoneyGram Payment Systems, Inc. over complaints of consumers who used MoneyGram’s wire transfer service to send money to third parties involved in schemes to defraud consumers.

The settlement will result in changes to MoneyGram’s practices and restitution for some MoneyGram consumers who lost money and filed complaints.

The states alleged that MoneyGram did not do enough to prevent schemes whereby con artists persuaded consumers to wire them money, such as scams in which a fraudster contacts a grandparent and falsely claims that money must be wired to assist with a grandchild’s medical or legal emergency, or 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.

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

Second, an independent third party settlement administrator 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. MoneyGram has agreed to pay a total of $13 million to fund this nationwide consumer restitution program, as well as to defray states’ costs and fees of the investigation.

More information about this settlement, including frequently asked questions and the list of participating states, is available at the Settlement Administrator’s website.

The settlement includes $20,000 to Delaware’s Consumer Protection Fund, to cover the costs of this investigation and to fund future consumer protection initiatives and investigations.

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