Regulators Probe MoneyGram Over Fraud Protection

The company-which recently moved its headquarters to Dallas-has been asked to provide documents about fraudulent transactions and consumer complaints.

Recently departed MoneyGram International, Inc., has been asked by several entities to provide documents related to its fraud protection programs, transactions, and consumer complaints.

According to a Wednesday regulatory filing, MoneyGram received civil investigative demands from a group of nine state attorneys general.

That group has started an investigation into whether the company has taken sufficient steps to prevent consumer fraud and is seeking information and documents relating to the company's procedures to prevent fraudulent transfers and consumer complaint information.

MoneyGram did not disclose in its regulatory filing which nine states initiated the investigation, and a Thursday morning call to Attorney General Lori Swanson's office to find out if Minnesota is among them was not immediately returned.

MoneyGram did say in Wednesday's filing that the Financial Crimes Enforcement Network of the U.S. Treasury (FinCEN) has requested information relating to the company's reporting of fraudulent transactions from 2004 to 2009.

The company has also been served with subpoenas to produce documents and testify before the Grand Jury in the Middle District of Pennsylvania relating to the same information. MoneyGram said it met with the assistant U.S. attorney for the Middle District of Pennsylvania and representatives of FinCEN in November to discuss the investigation.

According to MoneyGram, no official claims have been made against the company. MoneyGram said that it is too early to predict whether any financial losses will result from the investigations.

The recently announced investigations aren't the first time MoneyGram has been under close watch by regulators. In October 2009, the company was ordered by the Federal Trade Commission (FTC) to pay $18 million because it knowingly allowed fraud to happen over its global money-transfer system.

The FTC said that fraudulent telemarketers used MoneyGram's money-transfer system to swindle consumers out of at least $84 million between 2004 and 2008.

According to FTC charges, MoneyGram knew that fraudulent telemarketers in the United States and Canada used its system to bilk consumers, but did very little about it.

MoneyGram-which has about 227,000 locations-announced in September that it was moving its headquarters to Dallas from its longtime home in St. Louis Park. The move, which did not result in any layoffs, was fueled by potential economic gains and the fact that the company was already “well rooted” in Texas.