Mercator Perspectives

Law Enforcement Gets It Wrong Again In MoneyPak Scam

What is it going to take for law enforcement agencies to understand the prepaid business? They want to fight crime, then it would be well worth their while to understand how crime happens rather than reflexively saying “if criminals use it, then it must be bad.”

The latest problem comes from North Dakota. State Attorney General Wayne Stenehjem issued a statement to warn the state’s residents that scammers are using “reloadable prepaid cards, such as the ‘Green Dot MoneyPak’ card” to commit wire fraud. The release goes on to say “’Since reloadable prepaid cards like the Green Dot MoneyPak are purchased with cash, the payments are untraceable and the card company will not refund the money,’” said Stenehjem.

First off, the Green Dot MoneyPak is not a prepaid card; it is a reload method for prepaid cards. Second, the MoneyPaks are not reloadable, the Green Dot card is. Third, these cards can be paid for in a variety of ways. Finally, this kind of fraud happens like any other sort of money transfer fraud in that an unwitting mark is duped into sending money somewhere they shouldn’t – there is nothing intrinsic to the card that makes it a fraud vehicle.

The fraud typically happens in the following general manner. A scammer sends out a message to a pool of dupes promising a large sum of money if the dupes will simply fund the opening of an account or pay taxes or shipping fees on a ‘prize.’ Then the dupe or dupes loads money onto a MoneyPak and uses that MoneyPak to fund a card held by the scammer. The scammer drains the funds and the dupe is left with nothing but an e-mail of promises and an empty MoneyPak. There are variations on the theme, but this is the general approach.

The MoneyPaks are often purchased with cash, but not exclusively. The MoneyPak is different than reloadable prepaid cards, and the two should not be confused. Most prepaid cards have some kind of fraud protection. Green Dot also includes a warning on its Web site about fraud schemes using the MoneyPak and warns customers against them (https://www.moneypak.com/ProtectYourMoney.aspx).

The problem here is not prepaid, but rather the foibles of greed and believing that there is easy money to be had.

To read the attorney general’s full statement, go to: http://www.ag.nd.gov/documents/11-28-11.pdf
 

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