Federal Officials Worry About MoneyPak’s Use In Fraudulent Schemes


Federal authorities are issuing warnings about a wide range of fraudulent schemes involving a popular prepaid money card product, reports the New York Times. Thousands of consumers have been lured into sending money through the card, called MoneyPak. For online fraudsters, the reusable green-and-white paper card that can be used to quickly “reload,” or transfer, hundreds of dollars in cash onto another prepaid card is often the money conduit of choice. The abuses are mounting as the market in prepaid cards is finding favor with people who don't have access to a traditional bank account or credit card.

The $80 billion that consumers are expected to put on prepaid debit cards this year is double the amount put on those products in 2010, says the Mercator Advisory Group, a banking industry consulting firm. Consumers also use the cards to transfer money into PayPal accounts to shop online. Law enforcement officials are concerned about drug dealers and other criminals using MoneyPak to launder small sums of cash, because money transfers using the cards are hard to track. “We are increasingly seeing MoneyPaks used to facilitate Internet fraud schemes and it is a concern for us,” said David O'Neil of the U.S. Justice Department’s criminal division. “Anything that makes it easier to get money from the victim to a fraudster concerns us.” The federal Consumer Financial Protection Bureau is looking into consumer complaints about prepaid cards.

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