Scammers Use Green Dot MoneyPaks To Steal Online

From: http://www.goldengate.bbb.org/article/b ... line-18427

Oakland, CA., March 25, 2010 – Internet thieves who used MoneyGram and Western Union cash transfers to steal millions from unsuspecting consumers are turning to a new way of getting their cash: Green Dot MoneyPaks.

The MoneyPaks, sold in stores across the United States, are reloadable debit cards normally used to make same-day payments or add money to prepaid cards or PayPal accounts.

The Better Business Bureau (BBB) warns that operators of phony websites are using the cards to help them cheat customers in much the same way they have used untraceable MoneyGram and Western Union wire transfers to defraud people in recent years.

The BBB says the public should be very cautious when using a Green Dot MoneyPak to pay an unfamiliar company or individual. Anyone who requires an upfront payment with a Green Dot MoneyPak is very possibly operating a scam.

Nationally, BBBs have received numerous complaints from consumers who say they were scammed by fake companies requiring online payments through Green Dot MoneyPaks.

A senior airman at Scott Air Force Base near Shiloh, Ill., lost $1,000 last month when paying for a treadmill with a Green Dot MoneyPak. “I was taken,” he said. Another victim, from University Place, Wash., asked “How can I be so stupid?” after losing $240 in an online scam involving MoneyPak.

Several victims told the BBB that they might have avoided the scams had the GreenDot MoneyPaks contained the same kind of warnings used by MoneyGram.

Last October, MoneyGram International, Inc., agreed to pay $18 million to settle Federal Trade Commission charges that the company allowed its money transfer system to be used by fraudulent telemarketers to steal more than $84 million from consumers in a variety of scams. The court order also required MoneyGram to provide a “clear and conspicuous fraud warning” on the front of all its money transfer forms.

As part of its investigation, BBB Trade Practices Investigators visited four local stores in the St. Louis area that sell Green Dot MoneyPaks. None had a point-of-sale warning about use of the cards. None of the cards had a consumer warning suggesting caution in using the cards. One MoneyPak card noted, “Send money safely and securely.” Another said the card “allows you to move your cash where you need it, fast and guaranteed.”

At each of the locations, a BBB investigator posing as a customer asked whether the card was safe. At three of the four, cashiers said the card was safe, even though the investigator said he wanted to use it to make an online purchase. “You should be fine,” said one. “I’ve never heard of a problem,” said another.

A cashier at the fourth store pointed out the words on the card, “Send money safely and securely.” But when asked whether it was safe to make an online purchase, she replied, “I can’t tell you for sure; I can’t give you a guarantee.”

The website for GreenDot MoneyPaks, moneypak.com, announces on its home page: “The safe and secure way to reload prepaid cards, load money instantly to a Paypal account,” and “make same-day payments.”

The site’s Frequently Asked Questions page does offer an extensive warning, including a caution against using the MoneyPaks to pay for items purchased online. “Only after a MoneyPak activation number is provided, does the unsuspecting customer learn that the goods and services are non-existent and the merchant can no longer be contacted,” the site says. “This scam has been used for everything from laptop computers, NFL tickets, televisions and baby strollers.”

In virtually every case, a consumer is asked to buy a MoneyPak and e-mail the 14-digit activation number to the seller. The number can be used to strip the cash from a buyer’s account and deposit it into an account controlled by the seller.

Terrille Boatin, a senior supervisor with Green Dot Corp. in Monrovia, Calif., said the company has seen a growth in MoneyPak scams. She said the company soon will add a warning to its phone line and hopes to make its website warning easier to find. She said the company plans to add a warning to the card, telling customers to guard the number “like cash” and give it only to "a trusted recipient.”

The Scott airman said he never saw the warning on the website. He said he found an ad on Craigslist for the treadmill, and the contact referred him to the site Affordabledepot.com. The site looked “very professional,” and he said he used a Green Dot MoneyPak to pay the $1,000 cost, as directed by the company. When he did not receive the treadmill, he contacted the BBB.

A man from Columbia, Mo., said he discovered a Playstation game system on a Yahoo shopping site and was directed to make payment to the company, Tech Gear Upgrade, using a Green Dot MoneyPak. “I thought it was weird that they didn’t take Visa or Mastercard,” he said. He never received the game system and has given up hope of collecting his $180. He said a warning on the card “would have made me stop and think.”

A woman from Mount Juliet, Tenn., said she paid $600 to a company called Online Bazaar, for a children’s swingset. After filing complaints with the Missouri and Tennessee attorney generals’ offices, the BBB and the FBI, she said Green Dot MoneyPak refunded her $300. “I was just so hurt,” the woman said. “I’m pretty smart, but I felt stupid.” She said there should be a clear warning on the card.

A man from North Richland Hills, Tex., said he used MoneyPaks to send $1,280 to Clearanceshop.com for a sofa and TV. He said the company’s website was sophisticated and even had a link to a fake BBB report that gave the company an A- grade. After learning he had been scammed, he contacted Green Dot to try to freeze the account, but it was too late. “They got me good,” he said of the scammer.

The BBB offers the following advice for consumers making online purchases:


Beware of any offers that do not accept credit cards and ask you to purchase a MoneyPak and provide a MoneyPak number in an e-mail or over the phone.
Reloadable cash cards like Green Dot MoneyPak and other methods of cash transfers like MoneyGram and Western Union should never be used to send money to anyone you do not know. These types of payments are virtually impossible to trace, and there is a good chance you will lose your money.