I won’t let go of MoneyGram.

On the one-year anniversary of the MoneyGram’s $18 million settlement with the Federal Trade Commission for its role in allowing gullible Americans to wire money to Canadian scammers, I went out and searched to see if it’s still happening.

It is.

I didn’t have to go far to find a victim. Only a few miles from Watchdog Nation HQ to find another victim of the Granny Scam who sent the money through MoneyGram, even though the company promises that it has cleaned up its act.

But first I must apologize to R. for passing on bad information. When a year ago, I first reported how MoneyGram had to pay $18 million back to customers who wired money to scammers, I attached an advice box to the column. (See last year’s video and Watchdog Nation report on MoneyGram here.)

The box stated, “If you were scammed in a MoneyGram wire transfer, here’s how you can apply for your part of the $18 million settlement.” I recommended calling MoneyGram and the Federal Trade Commission. That’s what MoneyGram and the FTC told me to tell readers at the time.

So R., who lives in Bedford, Texas followed my advice. A month before, he had received a letter telling him he won the Maple Leaf Lottery. His prize, he was advised, was $520,000! It made sense. He had traveled in Canada and entered a few contests. Now all he had to do was deposit the first prize check in his bank, then take that money and wire it to Canada for his taxes and fees so he could get the rest.

He did as told. A few days later, he got a note from his bank that the check was a counterfeit. He lost $4,000. (An embarrassed R. asks that he not be identified.)

My original notes from last year quote an FTC spokesman telling me, “We’ve got $18 million here, and that’s going to mean a bunch of money going back to defrauded consumers.”

Not to R.

“Nope,” he says. “Got nothing.”

After he filed complaints with MoneyGram and the FTC, he never heard back.

He asked for help, and I contacted MoneyGram on his behalf. A company spokeswoman verified that his claim was not included in the settlement because it came after the redress program had ended. Besides, R. had no proof that he faxed his complaint to MoneyGram in the first place. (Remember to get written or taped confirmation!)

An FTC spokesman tells me that the $18 million ran out almost immediately after the settlement was publicly announced.

“At that point, literally, both the FTC and MoneyGram were inundated with complaints from victims,” FTC’s Todd Kossow said.

If the new complaints had been added, “They would have diluted the pool,” he said.

He estimated that “the amount lost by consumers through fraud-induced money transfers using MoneyGram’s system likely was in the hundreds of millions of dollars for the years 2004 through 2008.”

R. wouldn’t have qualified anyway, Kossow explained, because, as MoneyGram stated, his transaction occurred after the qualifying period for settlements ended in 2008.

The government says 34,000 redress checks were mailed to victims — totaling $18 million. The average check was $520. But most victims lost a lot more than that in various scams in which money was wired to MoneyGram outlets in Canada.

The original FTC complaint accused MoneyGram of helping U.S. consumers transfer $84 million to scammers in this country and abroad. The FTC alleged that 10 percent of MoneyGram’s Canadian agents (134 employees) were involved in the scams as partners.

MoneyGram’s executives were warned and did nothing, the agency said. Company whistle-blowers were disciplined or fired. The FTC alleged that company leaders said fixing the problem was too costly.

At the time, MoneyGram announced that it would not fight the complaint to avoid “battling it out through a long and costly trial.”

Recently, MoneyGram spokeswoman Lori O’Briant told me the company has worked hard to beef up its anti-fraud efforts, including increasing fraud specialists on staff, using “a new multimillion dollar Fraud Prevention System that helps stop fraud before money is sent.” She said it also had built closer relationships with law enforcement agencies around the world, updated its money transfer forms to alert consumers of potential danger and improved its hiring practices.

So how’s that working?

Well, in September 2010, a 74-year-old Hurst, Texas woman was swindled out of $6,000 in “the granny scam” when she wired money to Canada thinking it was for her nephew. Hurst police tell me that $3,000 was wired through Western Union, and $3,000 was wired through MoneyGram.

R. says there’s really no policing to detect and punish those involved. “I even spoke to the Royal Canadian Mounted Police, and their attitude was, ‘We’ll be looking out for them. We know it’s happening, but it’s hard to catch them.’”

R. also filed a complaint with the U.S. Postal Inspection Service (his “winning” letter arrived in the mail). But nothing came of that, either. Service spokeswoman Amanda McMurrey says, “Typically, in these situations, there’s not much we can do except forward that on to the government of Canada.”

The best defense, she says, is to understand that a bank will deposit cash for a check into a person’s account in a few days, but if the bank later learns the check is a counterfeit, the account holder is responsible for repaying the money.

Requests for wire transfers are a telltale sign of a scam. Never wire money to anyone without double-checking the circumstances and individuals involved.

# # #

In fairness, Watchdog Nation wants to share MoneyGram’s response to the above in full:

“At MoneyGram, we take consumer fraud very seriously. Our ability to provide safe and reliable payment services for our consumers is critically important to our business.

“Over the last year, MoneyGram has renewed it commitment to preventing fraud. Measures undertaken by the company include:

• Tripled anti-fraud staff
• Intensified operational scrutiny of transactions with a new multi-million dollar Fraud Prevention System that helps stop fraud before money is sent
• Expanded global outreach with law enforcement and regulatory agencies
• Reporting to and communicating with FTC and partnering with other financial services providers, law enforcement agencies and industry councils to promote consumer awareness
• Updated our money transfer send form to better educate customer and raise awareness of scams
• Created new agent facing policy – enhanced requirements for applicants to become a MoneyGram agent, as well as enhanced agent education/training to mitigate fraud

“As a result of our actions, we have prevented more than $30 million dollars in fraud this year alone. In addition, fraudulent transactions sent from the United States to Canada have decreased by 75% since May (Canada has historically been one of the most active fraud corridors).

“Additionally, in order to protect and educate our customers we:

• Post warnings on our website on various kinds of scams, as well as warn consumers that MoneyGram should not be used for Internet purchases
• Clearly communicate and warn customers about possible fraudulent transactions on our money transfer forms – including asking if the customer is sending money for the purchase of a car, or rent an apartment, or claim a lottery, etc.
• Provide training for agents to help spot possible fraudulent transactions
• Clearly alert consumers to never send money to people they do not know
• We ask customers who believe they have been a victim of fraud to contact us at 1-(800)-MoneyGram as well as report it to local police. We can then work with police and federal authorities who will further investigate the scam.”

Lori O’Briant
Corporate Communications & Media Relations Manager
MoneyGram International

###

Read the FTC’s Consumer Alert “Money Transfers Can Be Risky Business”

###

Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber

UPDATE: On May 12, 2010, Shawn Tatum pleaded guilty to theft charges and was sentenced to 180 days in jail, 10 years’ probation and community service. He also has to repay his former customers $162,000. Here is the original story on this crooked roofer.

# # #

Shawn Tatum taught me more about being a watchdog than any man I know. Recently, a Tarrant County grand jury indicted him on theft charges. He spent a day in jail. How he got there is how I learned my lesson.

Tatum was my roofer, even though, as he once said, “I never held a hammer in my hand.” We met after I asked my insurance agent whether he knew a good roofer. He recommended Tatum.

Looking back, I understand now that in my haste to avoid the complicated process of finding an honest roofer after a Texas hailstorm, I got lazy. Left myself vulnerable. But my search had problems from the start.

The first company I hired to replace my roof after the 2007 hailstorm did a fantastic job. The only problem was that the crew went to a neighbor’s house instead of mine and replaced the wrong roof.

When my confused neighbor knocked on my door that night to explain what had happened, he told me that the erring roofer demanded that he pay him by filing an insurance claim. No way!

I called the roofer. When I suggested that he take the loss on my neighbor’s roof because it was his mistake, he got angry with me for interfering. I asked to get out of our contract. First he said no. Then, after I kept asking, he agreed to sever our ties.

Blessed with a second chance, I took the shortcut to the insurance agent. And not long afterward, Buck Wesson, Tatum’s charming, silver-haired sales director, showed up and mesmerized me with his pitch.

This is the point in the sales process when you should say, “Can we talk by phone in a few days?” and shoo the salesman away. Then you turn on the computer or call the reference desk at the public library and begin asking questions: Does the company show up on the Internet? What does the Better Business Bureau say? Is it a member of any state associations? Are there references from past customers?

Hindsight. I know.

I signed the contract and gave Buck my insurance check. Two months later, after hearing nothing, I called and was told, “Buck don’t work here no more.”

So I talked to Tatum, an Orson Welles look-alike from Arlington who promised to do the job but explained that there were delays.

Turns out he was giving the same speech to a hundred other customers. He was taking their checks — and cashing them at a grocery store in Arlington because he kept his money out of banks — but not doing the work.

After months of delays and excuses, Tatum sent a crew to put on my roof. I later learned that I was one of the lucky ones. Only a few got service. Now every time I look at that roof, I think of the victims who will never see a dime.

In 2007, Tatum Contracting filed for bankruptcy, listing $671,000 in debts. The 86 creditors included homeowners, suppliers and subcontractors who did the work for the man who never held a hammer.

One client, Helen Webb, an elderly Watauga widow, spent two hours with Tatum at her kitchen table. She wanted to hold the $1,700 insurance check in a bank account, but he persuaded her to let him have it. “He said he would do my roof next,” she recalled. Her certified letters to him were returned, marked refused.

The list of creditors — on which my name is mistakenly included — offered a road map for Tarrant County district attorney’s investigators, who sent letters to everyone. “It has come to our attention that you may be a victim of a criminal offense committed by Jerry Shawn Tatum,” they said.

Sixty people responded with stories of how Tatum owed them either a roof or money. From that, 17 cases were strong enough to take to the grand jury, which returned an indictment July 15 alleging theft of more than $100,000.

“The sheer volume” of that many jilted customers shows a pattern of theft, says Assistant District Attorney David Lobingier of the economic-crimes unit.

My attempts to reach Tatum by mail, phone and e-mail last week were unsuccessful. During a 2008 bankruptcy hearing, he testified that he always intended to perform the work and that he had been in business for three or four years.

In a separate case in March, Tatum pleaded guilty in 371st District Court to a hot-check charge involving more than $1,500. He was sentenced to two years’ probation.

Dan Pitts, former president of the North Texas Roofing Contractors Association, says customers shouldn’t give contractors money before a job is started.

“I would say our average roof job is $8,000 to $10,000, and we get no money upfront,” says Pitts, who owns Pitts Roofing in Haltom City.

“It’s hard to get someone back [to your house] when you owe them very little money,” he says. “It’s hard to get them to respond to your phone calls. But if you owe them money, they’re much more apt to return your phone calls.”

For me, the lesson learned two years ago was to stop relying on the advice of others and instead take greater responsibility in my decisions. My insurance agent apologized to his customers. But I don’t blame him. He’s an indirect victim himself.

In a sense, after this, my roles as a newspaper watchdog and vigilant consumer merged into one. Coming close to losing thousands of dollars taught me to take nothing for granted. Everybody needs to be a detective. All the time. On everything.

# # #

Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber

My colleague at the Fort Worth Star-Telegram, Yamil Berard, has written a story that is significant for every Texan! Cuts ordered by Gov. Rick Perry in the state budget mean that bad doctors can continue to be bad. Same goes for bad electricity providers, bad elevators, tow truck companies, auto storage facilities, beauty shops and many, many, many other businesses.

Texans are losing major protections from their government. This is going to effect the health, pocketbook and well-being of every Texan.

Here’s her story below. I reprint it in case you missed it.

State agencies expect to investigate fewer consumer complaints of wrongdoing by insurance companies, veterinarians and utility companies, as a result of budget cuts proposed to comply with an order from Gov. Rick Perry and other legislative leaders.

Fewer elevator systems, funeral homes, beauty shops and tow truck companies would be scrutinized to make sure they’re providing safe, quality services if the cuts go through as expected.

And consumers would likely lose out on millions of dollars that they would have otherwise pocketed. The Texas Department of Insurance alone estimates that policyholders would sacrifice up to $3 million that would otherwise have been recovered from resolving hundreds of complaints.

Regulatory agencies weren’t spared from the required 5 percent budget cuts intended to help make up for an anticipated shortfall of at least $10 billion in the state budget, even though the agencies typically take in more than enough money from fees and penalties to cover their budgets. The agencies keep a portion, then send most of the money they collect to the state’s general fund to be distributed for other uses.

“It’s a hard economy,” Public Utility Counsel Sheri Givens said. “We’re stretched, but it’s something the Legislature asked for and we’ve complied.”

A question of efficiency

Now the debate is whether the agencies, as they emerge leaner, can also be meaner.

Some say the cuts are appropriate and will lead to better efficiencies in government operations.

“Families are doing the same thing, tightening their belt,” said Peggy Venable, state director of Americans for Prosperty, a political advocacy group whose national headquarters are in Washington, D.C. “We realize that government is too big.”

The group’s Texas chapter and the Lone Star Foundation have partnered to review state expenditures, Venable said. The groups are expected to propose a budget to the Legislature, she said.

The proposal would reflect methods of saving money so that spending is capped.

“Bottom line, some of those regulators and the certification processes [they use], we believe, is totally unnecessary,” she said. “And the self-regulation that takes place doesn’t really result in what we think we need.”

But others say the 5 percent budget reductions will hinder key agencies from fulfilling their role of keeping Texans out of harm’s way.

“Every day, you get on an elevator; you get your hair cut; you get your nails done,” said Alex Winslow, executive director of Texas Watch, a consumer advocacy group in Austin. “If these agencies are having to curtail the number of inspections they do, they’re going to be less likely to be able to find problems.

“Their task is to make sure Texans are safe, and if don’t have resources to do their job, it raises very serious concerns. In some cases, we’re approaching a danger zone.”

Regulatory agencies are income-generators for the state. The Legislature determines how much money the agencies can spend at the beginning of the two-year budget cycle. Agencies then may set their fees to cover operating expenses as well as the amount that the state wants returned for the general fund.

For example, the Texas State Board of Veterinary Medical Examiners collects more than $2.2 million in licensing fees. The Legislature gave it an operating budget of about $1 million for fiscal 2010. The board gives the general revenue fund about $1.6 million.

“As a general proposition, you don’t get to quote, ‘keep,’ anything,” said Dewey Helmcamp, executive director of the board. “That’s the way of the flow.”

Effects on the agencies

Some proposed cuts have been described as “dramatic” and “severe.”

The Texas Medical Board, for example, reported that the 5 percent cut will leave it without enough resources to monitor alcohol- and drug-impaired physicians and other medical professionals.

It also says that its backlog of quality-of-care cases will grow by several hundred if money for expert physician consultants is reduced. The agency already has a backlog of 500 cases. That means hundreds of complaints of bad medicine won’t be addressed, because the physician consultants cannot review cases and give guidance on whether a quality-of-care standard was violated.

“Virtually all of the TMB’s key enforcement performance measures will be negatively impacted if reviews by expert panelists have to be put on hold,” the medical board said in its report filed with the Legislative Budget Board. Without such reviews, standard of care cases, which make up 70 to 75 percent of investigations, cannot be resolved. So none of those cases would be dismissed or would result in a disciplinary action.

Givens said she didn’t want to sacrifice any of her 18 employees at the Office of Public Utility Counsel, which represents the interests of residential and small business customers in utility matters, such as rate increases. But she was asked to cut more than $87,000 from a $1.7 million budget. She is pulling it out of the amount the agency spends on professional fees and services to retain outside experts to review litigation.

The Texas Board of Nursing didn’t want to ax any single program, Executive Director Katherine Thomas said, so it made across-the-board reductions.

“It’s been very difficult, but we’ve been through budget cuts like this before,” Thomas said. “If we have to do it, we have to do it.”

It won’t be able to resolve complaints as quickly because it would have to lay off some investigative staff. Complaints would take 212 days to resolve, rather than 188 days.

And the cuts would slow down random audits and criminal background checks of thousands of state-licensed nurses, the agency says. The nursing board had expected to complete the random checks in a decade but, with the cuts, the effort will take more time.

“Nobody likes it, but we’re all in the same boat,” Helmcamp said. “I know the public probably doesn’t believe it, but we’re operating very close to the minimum we need to get by.”

The bulk of the cuts will come from dollars he would have spent to pay staff to travel to investigate cases of abuse. More of the investigative legwork will be conducted instead by phone, mail and fax, he said.

“There are some cases where we do like to send investigators out,” he said. “We’ll still be able to do that to some extent, just not as much as I would prefer.”

The Texas Department of Licensing and Regulation, which has 380 employees, isn’t filling a number of vacant positions, spokeswoman Susan Stanford said.

Those positions include inspectors of elevators, tow truck companies, auto storage facilities, beauty shops and other businesses. Inspectors make sure shops adhere to sanitation standards, use proper equipment and employ only workers with proper licensing.

The agency didn’t want to cut the budget of its licensing division, Stanford said. “It’s important for the citizens of our state to get their own licenses and not hinder the opening of a new business.”

Texas Department of Insurance spokesman Ben Gonzalez declined to comment about its proposed cuts.

“It would not be appropriate for us to comment,” Gonzalez wrote in an e-mail. “State leadership requested reduction plans.”

He referred any questions to the report the agency filed with the Legislative Budget Board.

It stated that cuts would restrict the agency’s ability to resolve about 1,600 consumer complaints, reducing the amount returned to consumers by $3 million.

The report also said that income benefits for injured employees would be delayed and that injured employees’ access to medical care would be hindered.

All agency heads are watching to see what happens. The order to propose ways to cut the budgets by 5 percent came from Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus. The legislative leaders have not yet approved the 5 percent reduction plan.

“We have not been instructed to execute that plan,” Gonzalez wrote. “Beyond that, we cannot speculate.”

Houston’s NewsRadio 740 AM turns to Watchdog Nation for help dealing with fraudulent door-to-door salesmen. Here’s the report and also copied below:

The big federal push to cover the uninsured is still a couple years away, but con-artists are getting an early start.

By John Labus

April 9, 2010  — They’re preying on the uninformed, getting people to buy health insurance policies that don’t exist. “The days of the Fuller Brush man and the encyclopedia salesman, those are over.”

Consumer advocate Dave Lieber with WatchdogNation.com says even if you have coverage, they’ll try to sell a fake supplemental policy. “The elderly are the easiest; they love it when an older person comes to the door. But they’ll take a 30-year housewife and sell her Obama Care too.”

Health and Human Services Assistant Secretary of Aging Kathy Greenlee says federal authorities are taking special care to warn the elderly about this latest scheme.

“First of all, the federal government is not going door-to-door to sell insurance. There’s no part of health reform that includes door-to-door salesmen… Be very careful with (your) Medicare number, and don’t give it out to people that you don’t have a prior relationship with.”

But Lieber adds that it’s not just the elderly who can fall into this trap. “They’re targeting everybody. And the most well-informed person is still susceptible to the scam that comes to their front door, because the scammers know how to talk to people in a way that just makes you feel at ease.”

Both agree that if an offer seems too good to be true, it probably is.

-30-

One of the best parts of Watchdog Nation’s blog is the ability to share the latest and not-so-greatest scams with you. Take the easy pickin’s when it comes to cars for sale, new cars, used cars, any and all.

Kudos to Kristina Logan, not only for not falling for some nitwit’s scam attempt, but also sharing what she learned with the rest of us. On behalf of Watchdog Nation, thank you to Kristina, a 7th grade language arts teacher at T.A.Howard Middle School in Arlington, TX, Mansfield Independent School District.

Kristina heard me talk about Watchdog Nation at a teachers’ conference; she heard me encourage everyone to check things out carefully. Teach, I’m glad you were listening.

She tells me:

“I wanted to thank you for encouraging us all to put up our guard when something seems too good to be true,” she says. “My husband and I are shopping for a car. On AutoTrader we found a great deal! $8,000 for a 2006 Acura MDX. Can you believe that?

“Well, I took your advice and checked into it. Turns out this guy, AKA Christopher Miller, was trying to pull a fast one. When I ‘googled’ his name and where he said that he was from, I see that this joker got the name  and city (Glasgow, Scotland) from a headline. Even more shocking … Christopher Miller is doing jail time of 18 years because he stabbed a soon-to-be-father.

“Long story short, I bet this clown didn’t think that I could actually do anything about it. (Perhaps sending back a couple of jolly emails as a retort will be enough, just to show I’m not falling for his scam.)

“Do you have any other suggestions that I could do to warn others?”

And my answer, of course, is here (with permission to identify her.)

# # #

From: Christopher Miller [mailto:cmiller7.6@hotmail.com]

Sent: Mon 2/15/2010 6:20 PM

To: Logan

Subject: 2006 Acura MDX‏

Hello,

Thank you for your interest about my car. Sorry for the delayed response, but I’m in Glasgow (Scotland) right now and I have been very busy. The total price of the 2006 Acura MDX‏ is $8,000.00USD . THIS IS MY LAST PRICE. I’ll not negotiate the price. The car is registered and located in United States. I want to keep the car for me, but I cannot register it here, as it is made for the USA market, according to US standards. So, I decided to sell it.

A few words about the car:

- 2006 Acura MDX‏

- Warranty: Existing

- Vehicle title: Clear

- Mileage: 102,800

- Body type: SUV

- Transmission: Automatic

- Engine: 3.5L V6 PFI SOHC

- Fuel type: Gasoline

- Exterior color: Silver

- Interior color: Black

- Drive train: All Wheel Drive

- VIN#: 2HNYD18636H546991

- You can see more photos right here: <a href=”http://pict.com/expo/3987579/446af7c46e”>http://pict.com/expo/3987579/446af7c46e</a>

The car is like new, in perfect conditions, accident free, no scratches, no special marks, no need for additional repairs what so ever. A genuine road runner ready to be yours, but only if you shall understand and you won’t make me loose time as it has already happened to me.

If you have any question please don’t hesitate to reply.

Thank you again for your interest.

Christopher Miller

Phone: 817-914 —- (redacted by DL in case it’s someone’s real number)

Sender IP: 76.185.147.220

# # #

Subject: RE: 2006 Acura MDX?

Date: Mon, 15 Feb 2010 19:29:03 -0600

From: Logan

To: cmiller7.6@hotmail.com

Thanks for the reply. I am very interested in seeing the car. I am in South Arlington. What would be the best time to meet someone? Evenings are best for me. Is the car in Grapevine?

# # #

Hello,

As I told you in my first e-mail, I am in Scotland, UK with my work. Before leaving US I had prearranged the deal with eBay VPP ( Vehicle Purchase Protection ) so my presence in US isn’t necessary. The car is in their warehouse ready for delivery.You have 10 days to test and inspect the car. So if you want to make this deal I need the following details from you:

*Full name and address

*Shipping address

*Phone #

After I will have all this details I will forward them to eBay VPP and I will proceed the order. eBay VPP will contact you with all the details that you need to complete this deal and also to see that i am covered by them and that I am legit seller.

Waiting your email with the requested details.

Regards!

Christopher Miller

# # #

Watchdog says: Check it out on the Internet before buying. She learned that a man named Christopher Miller was involved in something awful (see it here) and that gave her pause about the whole overseas operation. he probably wasn’t the same Christopher Miller, but it was enough to serve as her wake-up call.

Remember that U.S. laws and regulations don’t apply overseas. When you’re dealing with scammers in Canada or across the ocean, remember they are among the best in the world. It’s almost impossible to get your money back.

# # #

Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber