FTC Distributes $115M to Moneygram Fraud Victims

The federal government has reimbursed nearly 40,000 victims of fraud schemes processed by MoneyGram.

According to a Friday (Feb. 10) Federal Trade Commission (FTC) news release, the more than $115 million reimbursement stems from a 2018 action by the FTC and the Department of Justice against MoneyGram “for failing to crack down on scammers using their payment system.”

The FTC says the action accused MoneyGram of violating a settlement from 2009, as well as a 2012 agreement with the Justice Department, in which Moneygram agreed to take measures to prevent scammers from using its system to defraud consumers.

According to the release, the FTC’s 2009 settlement with MoneyGram included an agreement that would have seen the company set up a fraud prevention program that required the company to investigate, restrict, suspend and terminate high-fraud agents promptly.

“The FTC charged that MoneyGram was aware of continued fraud on their payment network after the settlement, turning a blind eye for years to numerous instances of suspicious payment activity by the company’s agents,” the release said.

In a statement provided to PYMNTS, MoneyGram says it has invested more than $800 million on compliance over the last decade.

“The number of consumer fraud complaints MoneyGram receives as a percentage of total money transfer transactions has consistently decreased over the past eight years,” the statement said. “In 2022, it was only 0.009% of the over 100 million money transfers processed by MoneyGram.”

While most of the victims in this case were older people, age is not always a primary factor in becoming a fraud victim, PYMNTS wrote last year following the release of the FTC’s Consumer Protection Data Spotlight.

That study found that adults between 18 and 59 were 34% more likely to report losing money to fraud, arguing against the conventional wisdom that cyberthieves target the elderly.

“Viewed another way, it seems that life experience — and probably having already fallen victim to scams along their journey — saw older Americans being less prone to most online scams,” PYMNTS wrote in December.

The FTC analysis also found that 18- to 59-year-olds were 330% more likely to fall for “too good to be true” cryptocurrency investment scams, and 86% more likely to be duped into bogus online deals, that often start on social media and move to purchasing items that never arrive.