Nearly 40,000 consumers who lost money to scammers using MoneyGram’s payment system will receive a combined $115.8 million in refunds as a result of a 2018 settlement with the Dallas-based company.
The Federal Trade Commission announced Friday that refunds will be distributed to 38,889 fraud victims who submitted claims in 2021. Those claims occurred between 2013 and 2017.
The government’s case against MoneyGram dates to 2009, when the FTC charged the money-transfer company with failing to crack down on the fraudulent use of its payment system. As part of a deferred prosecution agreement in 2012, the company agreed to issue refunds and reduce scammers’ ability to receive money from consumers.
In 2018, MoneyGram was charged with violating the 2009 and 2012 agreements. The FTC said at the time that MoneyGram’s computerized monitoring system, aimed at blocking known fraudsters from using its service, malfunctioned for an 18-month period in 2015 and 2016.
“MoneyGram violated an FTC order by continuing to let scammers rip off its customers,” said Samuel Levine, director of the FTC’s bureau of consumer protection in a release. “Other firms that facilitate fraud and ignore FTC orders should expect to face similar consequences.”
In the original 2009 settlement, MoneyGram had agreed to put a fraud prevention program in place and was required to investigate high-fraud agents.
MoneyGram operates in more than 200 countries with 430,000 agent locations. The company’s revenue topped $1.28 billion in 2021.
Last year, MoneyGram struck a $1.8 billion deal with Chicago investment firm Madison Dearborn Partners to be taken private. MoneyGram said in a regulatory filing Jan. 30 that the deal is awaiting approval from the Reserve Bank of India, which issued it a money transfer license in the South Asian country.
The parties agreed to extend the deal closing deadline to May 14.
