NBC.com’s “Consumer Man” Herb Weisbaum worked closely with BBB on an important story today about how scammers use Green Dot MoneyPaks and similar cash-load cards to defraud consumers. Scammers tell their victims that they have won a contest or lottery of some kind, and that they need to pre-pay taxes or fees in order to collect their big winnings. Sometimes they claim BBB is a co-sponsor in order to add credibility.
Here are some highlights from the NBC story:
A MoneyPak lets you go to a supermarket or drug store (more than 60,000 places nationwide) and convert cash into digital currency that can be loaded onto a prepaid debit card or added to a PayPal account. The MoneyPak card you buy at the store is a deposit slip. It gives you access to that money via the 14-digit authorization code on the back.
“As soon as the victim gives the scammer that code, they use it to load all of your money onto their prepaid card,” explained Karen Hobbs at the Federal Trade Commission. “Then they can run to an ATM and get all of the money in cash or they go to an electronics store and buy things that are easily fenced. Once that money is offloaded, it is essentially irretrievable.”
A number of companies provide a cash-load service for prepaid debit cards. Green Dot is the leader in this industry and therefore the most requested by the bad guys.
“We do not want people to be victimized by fraudsters who try to steal their money this way,” said Green Dot spokesman Brian Ruby. “We hope people will see the yellow warning that is now on the MoneyPak card, right above where you scratch to get the card number. Use your MoneyPak number only with business listed at moneypack.com. If anyone else asks you for your MoneyPak number, it’s probably a scam. If a criminal gets your money, Green Dot is not responsible to pay you back.”
The prepaid card industry is keenly aware of the fraud problem and is working to thwart the bad guys. “We’re setting up systems to identify when a prepaid card is getting several reloads via PINs followed immediately by cash coming off the card, especially when it’s in a foreign country,” explained Terry Maher, general counsel for the Network Branded Prepaid Card Association. “That would trigger an alert and the card could be blocked.”