​Beware fraudsters targeting the MoneyPak cash service

There may be nothing new under the sun, but when it comes to crime there are certainly variations on old themes.

A cash transfer product called MoneyPak has attracted online fraudsters who use old schemes to scam their victims. The product, sold by financial services company Green Dot (GDOT), has come under attention from the Senate Special Committee on Aging, which last month held a hearing about scams targeting the elderly.

MoneyPak cards are targeted toward "unbanked" and "underbanked" Americans, or the 34 million households who lack bank accounts or who have some type of account but still rely on services such as check cashing. The reason why MoneyPaks have caught on with criminals is that they carry a 14-digit code on the back that provide access to money that customers have place on the product.

In some frauds, the criminals impersonate a utility or law enforcement official and claim their target owes money. They then tell the victim to pay up by loading money on a MoneyPak and giving them the 14-digit number. That allows the criminal to gain access to the funds loaded into the product.

Other scams involve criminals telling their victims that they've been pre-approved to apply for a loan, but first they'll need to make payments, which can be made through a MoneyPak.

The scrutiny on MoneyPak comes as more Americans are relying on pre-paid money cards. In 2011, consumers loaded $57 billion on prepaid cards, a number that is expected to reach $167 billion this year, according to the Consumer Financial Protection Bureau, which cites data from Mercator Advisory Group.

And it's not only MoneyPaks that are targeted by criminals. Americans lost more than $73 million to impostor scams last year, the Senate Committee on Aging said.

While MoneyPaks aren't pre-paid cards, they allow consumers to load up those cards with cash or add money to their PayPal account, without requiring a bank account. Consumers can also make same-day payments to companies with the service.

The 14-digit code is hidden under a scratch-off strip on the back of the card. That may be the service's Achilles heel, since anyone gaining access to one of the codes can also get their hands on the money loaded on that card. Enter the fraudsters.

MoneyPak even warns consumers not to give out the code, cautioning in a red box around the scratch-off strip that anyone asking for the number could be scamming them.

The good news for consumers is that Green Dot is phasing out the service with a similar product called Reload @ the Register. The updated service eliminates the 14-digit codes and uses a "swipe" to load money for customers. Walmart (WMT) has already replaced its MoneyPaks with the newer service, the company said at the Senate hearing.

"Green Dot is committed to educating consumers about how to avoid becoming victims of financial fraud scams and has partnered with the Consumer Federation of America to help enhance these efforts," Green Dot said in an emailed statement to CBS MoneyWatch.

It added, "Consumers should protect their MoneyPak numbers just as they would cash, and Green Dot makes vigorous efforts to remind consumers on the MoneyPak packaging and website never to give their information to a private individual, to someone claiming you have won a prize or lottery, or to pay for items purchased from classified ads."