Scammers Exploiting MoneyGram Money Order Verification System

If you were scammed recently with a money order, the counterfeit might have been an instrument spoofing the MoneyGram brand. These money orders have been known to appear in all the too good to be true/don’t exactly make sense come-ons being passed by spam e-mails or via a direct solicitation in a chat room.

In case you are not familiar with all the variations of these come-ons, they include , but aren't limited to (new lures surface frequently), the secret shopper, romance, lottery, work-at-home and auction scams.

The common denominator in most of the scams is there will be a request to send the money you receive via wire transfer (if you don’t get caught), to the fraudster sending you this garbage for a small cut of the total amount. That is unless they are buying goods from you. In this case, the item you are selling is what they want.

In the past, a simple call to MoneyGram’s verification line (1-800-542-3490) normally was all that was needed to reveal the fact that the item was fraudulent. Unfortunately, this is no longer the case. The criminals producing these instruments are now taking advantage of a flaw in the automated verification system, which is tricking people into believing that the money orders are good.

When a MoneyGram money order is called in for verification, the system prompts the user to enter all the particulars of the instrument, including the serial number and dollar amount. If the system doesn’t spot a discrepancy, it gives out a standard disclaimer stating there are no stops or holds on the item. If the system catches a discrepancy, it directs the caller to a live operator during their business hours.

In recent weeks, I’ve received reports of this being exploited in two ways. In the first instance – a legitimate money order is purchased for a small amount (normally $1.00) –then is chemically washed and altered to reflect a large dollar amount. It is then passed before it registers in the verification system – and since the system doesn’t recognize the dollar amount – it gives out the standard disclaimer that tells the caller there are no stops or holds on the item. According to the people, I’ve asked, money orders do not register in the system for anywhere between 24 and 96 hours after being issued by a MoneyGram agent.

In these instances, since the item was printed on actual paper, it contains all the known security features. These include a heat sensitive circle, which changes color when rubbed.

A second variation of this scam has also been seen. In this variation, the instrument is a copy of a money order purchased for a small dollar amount. These will pass muster in the system as described above, but the security features will not be present. In this second version of the scam, the dates were printed to make it appear as if the item had been purchased several weeks before the legitimate item actually was. I suspect this was to trick people, who had already discovered the "washed instrument" mutation of this scam.

When I first started getting reports on these variations of the scam, I thought it might be only targeting a limited geographical area. Normally when washing items occurs, this is the case. Since then, I've discovered this is happening throughout North America and the items are being shipped using overnight services, such as Federal Express and UPS.

I have also had reports that these are being passed not only via online come-ons, but also by professional groups who specialize in passing counterfeit instruments.

I went to the MoneyGram site to see if there were any warnings about this specific scam and found none. They do have a consumer protection area on their site, which refers to all the come-ons to trick people to cash these items. They also have information on how to verify their product in the FAQ area for customers on their site.

The sad fact is that money order companies do not take a loss on these instruments. When the items is discovered to be a fraud – they return it to the institution who cashed it and the institution goes after (if they can find them) – the person who cashed them. With any money order, it is nearly impossible to be made whole by the issuing company, itself. In fact, many experts will tell you that accepting a money order is more risky than accepting a personal check. If you listen to the disclaimer on the verification line it tells you exactly that.

So far as getting these instruments in too good to be true online scams – with the sour economy – I am seeing more and more people who really want to believe they have come into a financial windfall. When they fall for these scams – one thing is for certain – which are they are going to be held liable for cashing the items when the scam is discovered. This will certainly include being held financially liable, but can also mean facing criminal charges.

So far as counterfeit MoneyGram instruments – although a lot of them seem to be out there – they are not the only items being counterfeited. U.S. Postal Money Orders have been seen frequently in the past, too. Recently, the U.S. Postal Service redesigned their product and has a new page on their site to help consumers verify their product. Counterfeit cashier's checks, money orders, gift and travelers cheques are also known to be frequently counterfeited and used in these types of scams.

If you want to learn more about these scams, I recommend going to fakechecks.org, where you can see some highly visual demonstrations of these schemes. Another good resource on this subject – particularly if you are a victim – is FraudAid. The folks at FraudAid actually provide resources and advocate for people falling for these scams.

Word of mouth is fraud's worst enemy!

FraudAid, a website dedicated to helping fraud victims has a saying, "Silence is fraud's best friend. Word of mouth is fraud's worst enemy. Pass the word!"

In a world, where fraud victims have a hard time getting anyone to even talk to them this saying makes a lot of sense.

FraudAid was conceived by a woman by the name of Annie McGuire, who fell victim to a fraud scheme, herself. Her personal story, which is told in great detail on the site proves that just about ANYONE can become a fraud victim.

In my personal dealings with victims, you would be surprised who has been scammed.

The problem is that most people -- especially those who think they should have known better -- rarely report that they have become a victim of fraud. FraudAid strives to educate all of us that the lack of communication enables fraudsters to victimize people (who if they have been made AWARE) might not be have been taken in by a fraud scheme.

Thus, the reason there seems to be so much fraud and the experts compiling all the statistics disagree on how much fraud exists. After all, "Silence is fraud's best friend."

The FTC just released their estimate of identity theft victims, which has raised a lot of speculation about how accurate their number is.

I have no doubt that the FTC did the best they could, but if fraud isn't reported, it's hard to quantify.

The FraudAid site is a wealth of information for someone, who is trying to seek help after becoming a victim. Of the greatest importance (in my opinion) is how to deal with the authorities.

One page on the site shows the average person how to write a narrative that will get the Police interested in going after your case.

It also goes into great detail on what law enforcement agency specializes in what type of fraud. This can be confusing for someone dealing with being victimized for the first time.

The site also addresses a growing phenomenon, which is how to avoid getting arrested after becoming a victim. With all the auction fraud and stolen financial information being sold wholesale, fraudsters have developed a need to launder the proceeds of their illicit transactions.

The way they do this is by tricking people to do it for them. This is accomplished by hiring them under "false pretenses" to negotiate all their illicit transactions and wire the money to them. This scam is often referred to as a work-at-home, job, or check-cashing scam.

Another variation, known as a reshipping-scam, tricks people into reshipping stolen merchandise.

In reality the victim is taking all the risk for the scammer -- and more and more often -- the rap for them when they get caught. Sadly enough, the end result is almost certain financial ruin and possibly being charged with a host of crimes including, check fraud, money laundering and receiving stolen goods.

Some of detailed information on the different scams that can be found on FraudAid include investment, Nigerian (419), sweetheart/romance, lottery sweepstakes, lottery, work-at-home, visa/green card, counterfeit check/money order and reshipping/package processing scams.

Also covered on the site is how to protect yourself and recover from identity theft. Many fraud victims later become a victim of identity theft when a fraudster sells all the information they've data-mined off them.

The site even contains information on child safety and human trafficking.

Backing all this up are a host of research tools for fraud, where to report it and how to take political action.

Annie is now backed up by a group of volunteers, one of whom, Karrie Brothers, assisted me with a lot of information on the current going-ons at FraudAid.

To grow this effort, Karrie and Annie are actively seeking volunteers to assist them. Being one of the few resources where a victim can turn to, they are getting a lot of business!

FraudAid gives a good explanation of why volunteers are needed and they are trying to grow their organization:

Fraud, by every measure, is one of biggest and fastest growing industries in the world.

One study values worldwide corporate fraud at over two trillion dollars. This is not counting consumer and Internet frauds for which there is no reliable assessment. Another study estimates that 6% of global product is laundered money.

The fraud industry is run by many, many skilled professionals. The anti-fraud industry is small and, by comparison, run by very few skilled professionals.

That's why if you have the skills you can make a real difference!

Fraud Aid, Inc. is a volunteer anti-fraud organization. We, as all other anti-fraud organizations, are out-numbered and need your help.

We have the frauds. Do you have the time?

To grow the organization, they are recruiting a wide range of volunteers with law enforcement, legal, IT and education experience. There are also opportunities for people with no experience, also.

Even if you think you are aware of all the fraud schemes out there, FraudAid is a great place to learn more about them. After all, if people weren't being taken in by the schemes, fraud would probably disappear pretty quickly!

If you want to learn more about FraudAid, the site can be seen, here.