COLUMBUS – Attorney General Jim Petro announced today that Western Union Financial Services, Inc. has entered into an agreement with Ohio and 46 other States and the District of Columbia, in response to concerns about the use of the company’s wire transfer services by fraudulent telemarketers. Under the agreement, Western Union will, among other things, fund an $8.1 million national consumer awareness program and set out very prominent consumer warnings on the forms used by consumers to wire money.
The problem addressed by the agreement is the high number of “fraud-induced transfers” -- that is, money wired by consumers to fraudulent telemarketers and other scam artists. For example, some telemarketers, often based in other countries, use a “lottery” scam, in which they tell vulnerable consumers they have won a large sum of money but must pay taxes or other charges in order to claim the winnings. The victims are then directed to send the money by wire, because wire transfers are fast, there are transfer agents in most communities, and funds can be picked up in multiple locations.
“I applaud Western Union for realizing wire transfers can be used to scam consumers out of their money and making changes to prevent their business from being a vehicle for fraudulent transactions,” said Petro.
The problem of fraud-induced transfers is substantial. Based on a survey conducted by seven states, it was estimated that over 29 percent of Western Union transfers in excess of $300 from the U.S. to Canada were fraud-induced, representing 58 percent of the total dollars transferred and an average of over $1500 per transfer. Total American consumer losses to Canada in the year 2002 alone were estimated by the states to be $113 million.
Some of the terms of the agreement just reached are:
- Western Union will reimburse the amount of any transfer plus fees to any consumer who requests, prior to pickup, that a transfer be stopped and who reasonably claims that the transfer was fraud-induced.
- Western Union will pay $8.1 million over five years for national peer-counseling programs to be overseen by the AARP Foundation and designed to reach at least 3 million consumers.
- Prominent warnings to consumers of the dangers of fraud-induced wire transfers must appear in English and Spanish on a new front page of Western Union’s Send Form, and comparable warnings are required for telephone and Web transfers.
- Western Union will send monthly anti-fraud emails to its agents, revise the company’s agent training video and manual, and provide enhanced training to agents with elevated fraud levels at their locations.
- Western Union will terminate agents who are involved in fraud, and suspend or terminate agents who do not take reasonable steps requested by WU to reduce fraud.
- Western Union will block wire transfers from specific consumers or to specific recipients when Western Union receives information from a state that there is reason to believe that fraud will occur, until such time as the consumer is counseled on fraud and requests resumption of the transfer.
- Western Union will pay $400,000 in costs to be shared among the negotiating states of Arkansas, Massachusetts, New Jersey, New York, North Carolina, Ohio, Texas, Vermont, Washington and Wisconsin.
Western Union Financial Services is a wholly-owned subsidiary of First Data Corporation, based in Greenwood Village, Colorado. Signing the agreement were the States of Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia.