The Federal Trade Commission sued MoneyGram saying the defendants records show the amount of money scammed just in the United States, tripled between 2007 and 2008 to nearly $24 million. MoneyGram promised to aggressively go after fraud, and in an unrelated action, so did Western Union. So 7 On Your Side tested them both.
Many scams only work as well as they do because money can be wired.
"If you are going to run a scam you've got to have some way to collect the money and the one they prefer these days is really wire transfer: Western Union and Money Gram," says C. Steven Backer from the FTC.
Once money is wired, it is all but impossible to trace or get back.
Five years ago Western Union entered into an assurance of voluntary compliance, agreeing to train its agents and warn consumers about fraud-induced money transfers. And just last year MoneyGram agreed to work harder to prevent its service from being a conduit for swindlers by "...detecting, preventing, reporting... suspicious transactions..."
So 7 On Your Side sent in undercover decoys to find out if they would be warned about potential scams.
"My first job as a money shopper I am so excited. Mystery shopper!" says the decoy trying not to be discreet, but more obvious. She even told the agent "It is my first job as a mystery shopper."
7 On Your Sides' mystery shopper decoy was never told she could be in danger of being swindled.
When asked if the decoy's transaction raised any red flags, the employee said, "Any red flags... why?"
That employee then asked 7 On Your Side to speak to his boss, Reza Razavi who is the president of Check Expert -- a financial service company that represents Western Union. He said his clerk did not hear the decoy's comments through the glass.
"Western Union is very good about sending fliers and monthly magazines and informing [about] the scams that are out there," says Razavi.
When asked if the words mystery shopper raised any red flags, he said "Not to me, no it didn't. If she was sending money to Nigeria, we would have caught that, to Canada, we would have said that. If she says I am buying something from eBay, I would have caught that. These are the stuff we are failure with, but mystery shopper doesn't tell me anything."
"It is pretty shocking because that is a very, very well known scam. There are some immediate, immediate red flags for that," says Linda Eagle.
Eagle co-owns the Banker's Academy and trains financial service employees. She says mystery shopper should have been a tip off.
Between 7 On Your Side and the ABC sister-station in San Diego, KGTV, we sent $1,000 back and forth, six times, twice from Western Union and four times from MoneyGram locations. San Francisco to San Diego the money went back and forth.
The San Diego decoy told the MoneyGram agent he had won a lottery and he was congratulated on his win.
"OK, that's definitely not exactly the way we would have liked that experience to have gone, and so we are going to make sure we are going to train, we continue to warn our customers," said Willard Hart from MoneyGram.
At a nearby service center where Western Union is used, employees warned against the transaction.
"The manager told me, he said 'Sir, there is nothing we can do, but it sounds like a scam,'" says Frank Castillo from San Diego.
Western Union declined an on camera interview, but wrote to 7 On Your Side, "We include consumer protection information in our agent training program. We also provide fraud alerts through monthly 'pop-up' messages that appear when an agent's Western Union system is activated."
Both services have recorded warnings if you call them on the phone and written warnings on their forms.
The FTC and consumer activists acknowledge that it is tough to train all the many thousands of third party employees, but say it is important if fraud is to be prevented.