MoneyGram to pay $125M, target fraud

WASHINGTON — MoneyGram International has agreed to pay a $125 million penalty to settle allegations from both the Federal Trade Commission and the Department of Justice that the company didn’t do enough to prevent fraudulent money transfers.

Under an agreement with the Federal Trade Commission, the company said it would take steps to crack down on scammers who got victims to wire them money in schemes that often targeted the elderly and ranged from bogus cash prizes, to impersonating government officials from the IRS to posing as troubled relatives needing money.

“MoneyGram’s alleged failure to implement key provisions of the order allowed scammers to continue to use its money transfer system to rip off consumers,” said Federal Trade Commission Chairman Joe Simons in a news release.

The Federal Trade Commission alleges that MoneyGram knew certain agents ignored suspicious activities.

Scammers often get people to use money transfers because they can remain anonymous and the funds can be sent globally. Once the criminals pick up the cash, it’s nearly impossible for victims to get their money back. From January to September of this year, 54 percent of government-impostor scams involved the use of a gift card or reloadable payment card, according to the Federal Trade Commission. But the next most common method of payment was a wire transfer.