N.D. AG says MoneyPak cards are subject of scam

By Bryan Cohen | Nov 28, 2011


BISMARCK, N.D. (Legal Newsline) - North Dakota Attorney General Wayne Stenehjem warned consumers on Monday about a new twist to wire fraud and advance fee scams involving reloadable prepaid cards, such as the Green Dot MoneyPak cards.

The cards are sold at thousands of retail stores, including Walgreens, Kmart, Walmart, Radio Shack and CVS. The cards are used like normal credit or debit cards, but are prepaid, reloadable and not linked to a bank account. Purchases are deducted from the balance stored on the card and the cards can be reloaded with additional funds. The consumer uses cash to reload or buy the cards.

"Scammers have moved to this new method of payment, reloadable debit cards, because there have been so many warnings about using Western Union and MoneyGram to wire money," Stenehjem said. "Right now, Green Dot MoneyPak appears to be the most frequently used prepaid card."

The scam artists tell victims that they have won a large amount of money or are eligible for a grant, but in order to claim their money they must pay an upfront fee. The victim is instructed to go to a store that sells the Green Dot MoneyPak and purchase the card for a certain amount. After purchasing the card, they are instructed to call a particular number or the con artist makes arrangements to call them back at a certain time. During the next contact, the scammer asks for the card code. Within seconds, the scammer strips off all of the money the victim loaded on the card.

"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," Stenehjem said.

According to Parrell Grossman, the director of Stenehjem's Consumer Protection Division, the victims do not understand how the prepaid cards work and do not realize that the money can be removed from the card just by telling a con artist the code on the card.

"Anyone who requires an upfront payment specifically by prepaid card such as a Green Dot MoneyPak is likely to be operating a scam," Grossman said. "We are aware of a Bismarck victim who lost over $17,000 last week and another incident over the past weekend in which the Bismarck Police Department foiled this scam when they were
contacted by the potential victim."

The scam is believed to be targeting victims all over the state.

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