Moneypaks can be used for funding PayPal accounts and to pay phone, cable or credit card bills. But the BBB of Minnesota and North Dakota and the Minnesota Department of Public Safety's (DPS) Alcohol and Gambling Enforcement Division (AGED) say criminals are also using them to fleece consumers.
The BBB and the DPS have recently noted a "significant increase" in various schemes where fraudsters tried or succeeded in collecting payments via MoneyPak for merchandise, advance fee loans or sweepstakes prizes -- all of which turned out to be either fraudulent or nonexistent."Both of our agencies are noticing that more and more scammers are moving away from seeking payments via wire transfer and instead asking consumers to give them money via MoneyPaks," Dana Badgerow, president and CEO of the BBB, said in a statement. "We feel this is likely due to the fact this form of payment is quite convenient -- for both consumers and scammers -- and untraceable."
Any website specifically requesting payment via MoneyPak is likely a scam, the BBB and DPS warn. Consumers should also exercise caution when using MoneyPaks to pay companies or individuals they don't know.
MoneyPak users also need to remember that anyone they share their card number with has instant access to their funds. Con artist, says AGED agent Bill White, trick consumers to load their MoneyPak cards with cash and divulge the card number, allowing them to siphon the cards dry.
In recent weeks, the BBB and DPS have received reports from consumers who:
- Were asked to pay advance fees on bogus loans with MoneyPaks.
- Were informed they'd won hundreds of thousands of dollars, but needed to pay an advance fee with their MoneyPak card to claim their winnings.
- Purchased heavily discounted home exercise equipment they found advertised on a fraudulent website (www.directhomefitness.com) but, after paying hundreds of dollars with MoneyPak cards, learned the merchandise was nonexistent.
To avoid falling for MoneyPak scams, consumers should:
- Be wary of websites or Craigslist advertisements linking to websites where customers are specifically asked to pay with a MoneyPak card.
- Never give their MoneyPak number to someone they don't know.
- Remember that advance-fee loan offers are illegal and targeted at customers and companies struggling with debt and poor credit.
- Remember that if you're told you have pay to a fee -- via MoneyPak or wire transfer -- to collect a cash prize or sweepstakes winnings, you're being scammed.
- Avoid offers that don't accept credit card payments and require you to purchase a MoneyPak and provide the card number via email or by phone.
- Beware of websites requesting MoneyPak as a form of payment even if they display the MoneyPak or Green Dot logo. Consumers should check www.moneypak.com for a list of approved MoneyPak partners.
- Treat their MoneyPak cards like cash. Unlike credit cards, MoneyPak transactions can never be reversed.
The Green Dot Corporation is well aware of the problem and warns consumers on the homepage of their site to beware of scams involving MoneyPak cards. The company's homepage also provides a link to a separate page with tips on avoiding MoneyPak fraud, as well as details on a number of common scams.
Consumers who have been scammed by fraudulent offers involving Green Dot MoneyPaks should contact their local law enforcement and file a claim, as well as complain to their state's consumer protection bureaus and the Federal Trade Commission.