SF 2657

as introduced - 89th Legislature (2015 - 2016) Posted on 04/04/2016 08:43am

A bill for an act
relating to commerce; regulating money transmitters; providing a private right of
action for fraud-induced transfers; establishing a duty to warn of potential fraud
and investigate fraud; amending Minnesota Statutes 2014, sections 53B.24;
53B.27, subdivision 1, by adding subdivisions.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 53B.24, is amended to read:

53B.24 ENFORCEMENT.

new text begin Subdivision 1. new text end

new text begin Commissioner's powers. new text end

Section 45.027 applies to this chapter.

new text begin Subd. 2. new text end

new text begin Actions by private persons for fraud-induced transfers. new text end

new text begin An individual
who sends money pursuant to a fraud-induced money transfer and is not a knowing or
intentional party to the fraud or other illegal activity related to the transfer may bring an
action in district court against the money transmitter and recover the transmitted amount,
including fees and charges accrued, along with costs, disbursements, and reasonable
attorney fees, if any of the following circumstances are present:
new text end

new text begin (1) the money transmitter or its agent involved in the transfer knew or consciously
avoided knowing that the transfer was a fraudulent transfer;
new text end

new text begin (2) the money transmitter did not comply with section 53B.27, subdivision 1a, at
the time of the transfer or did not comply with section 53B.27, subdivision 1b, within a
reasonable amount of time after the transfer;
new text end

new text begin (3) the sender or the receiver was or should have been disqualified under section
53B.27 at the time of the transfer; or
new text end

new text begin (4) the sender or the receiver was or should have been identified on the "No Transmit
List" under section 53B.27, subdivision 3, at the time of the transfer.
new text end

Sec. 2.

Minnesota Statutes 2014, section 53B.27, subdivision 1, is amended to read:

Subdivision 1.

Fraud prevention measures required.

Each money transmitter shall:

(1) provide a clear, concise, and conspicuous consumer fraud warning on all
transmittal forms used by consumers to send money to an individual;

(2) provide consumer fraud prevention training for agents involved with transmittals;

(3) monitor agent activity relating to consumer transmittals; deleted text begin and
deleted text end

(4) establish a toll-free number for consumers to call to report fraud or suspected
fraud deleted text begin . deleted text end new text begin ; and
new text end

new text begin (5) include on all send-money forms a section reasonably designed by the money
transmitter to detect whether the purpose of the transfer is fraudulent.
new text end

Sec. 3.

Minnesota Statutes 2014, section 53B.27, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Duty to warn for potential fraud. new text end

new text begin A money transmitter shall have in place
written and verbal warnings sufficient to adequately warn consumers of recurring, frequent,
and current fraudulent schemes involving the use of money transfer services, including:
new text end

new text begin (1) warnings reasonably adapted to warn against specific types of fraud scams
and trends in wire-transfer fraud as learned through investigation and review pursuant
to subdivision 1b;
new text end

new text begin (2) written warnings pursuant to subdivision 1 that are updated at least annually to
address trends in fraud conducted over wire-transfer systems; and
new text end

new text begin (3) verbal warnings by agents about specific and known forms of fraud when
indications of specific fraud are reasonably shown by the consumer's conduct or statements
leading up to and during the transfer.
new text end

Sec. 4.

Minnesota Statutes 2014, section 53B.27, is amended by adding a subdivision
to read:

new text begin Subd. 1b. new text end

new text begin Duty to investigate fraud. new text end

new text begin A money transmitter shall:
new text end

new text begin (1) investigate all complaints or reports of alleged fraud-induced money transfers or
fraudulent schemes to induce money transfers from a customer, a person with the legal
authority to act on behalf of a customer, federal, state, and local law enforcement agencies
and departments, and any agents or employees of the money transmitter;
new text end

new text begin (2) create a report for each completed investigation that identifies the name and
address of the customer who was allegedly victimized, the send amount, the date of the
transfer, if completed, the intended recipient, a description of whether and how the customer
was defrauded, and whether the transfer was identified by an antifraud alert system or other
electronic system or protocol meant to detect fraudulent transactions as they are occurring;
new text end

new text begin (3) use investigation reports to monitor and understand trends and new forms
of frequently occurring fraudulent schemes, to monitor particular agents and regions
involving high rates of fraud, and to identify elevated risk factors and current patterns in
fraud-induced transfers for purposes of assisting law enforcement, developing effective
warnings, and preventing future fraudulent transfers; and
new text end

new text begin (4) designate knowledgeable employees, agents, or attorneys to supervise and
maintain investigation reports, monitor trends in fraud-induced transfers as provided in
this section, and provide such reports upon request to the customer who submitted the
complaint of potential fraud or that person's authorized agent, and federal, state, and local
law enforcement agencies and departments.
new text end