Attorney Generals in 45 states and the District of Columbia announced today that they have entered into an agreement with Western Union Financial Services, Inc. (“Western Union”) that will educate consumers and discourage fraud-induced transfers using Western Union’s wire services.
The agreement will curb “fraud-induced transfers,” in which unsuspecting consumers wire money to telemarketers and other scam artists. Some telemarketers, often based in other countries, use a “lottery” scam, in which they entice consumers into wiring them money for “taxes” or other charges in order to receive false lottery winnings. Other scammers frighten consumers into wiring money with a false story that a loved one needs bail money or emergency medical care.
Western Union and all states have joined forces to reduce the frequency of fraud-induced money transfers that are encouraged by scam operators. Western Union operates 40,000 wire transfer points in the U.S. and more than 195,000 around the world which, up to now, have been fertile ground for fraud artists to perpetrate crime against innocent consumers.
International wire fraud scammers have hit American consumers especially hard. For example, a seven-state survey found that approximately 29 percent of Western Union money transfers to Canada in excess of $300 were fraud-induced. Fraud-induced transfers represented about 58 percent of the total dollars transferred, at an average of over $1500 per transfer. Total American consumer losses to Canada in the year 2002 alone were estimated at $113 million.
Under the Agreement, Western Union will, among other actions:
- Publish prominent warnings to consumers on Send Forms about fraud-induced wire transfers in both English and Spanish;
- Pay $8.1 million over five years for national peer-counseling programs, overseen by the AARP Foundation, to reach 3 million consumers;
- Reimburse the transfer amounts plus transfer fees to any consumer who requests, prior to pickup, that a transfer be stopped and who reasonably claims that the transfer was fraud-induced;
- Regularly advise and provide enhanced training for Western Union agents about fraud issues;
- Terminate agents who are involved in fraud, and suspend or terminate agents who do not take reasonable steps requested by Western Union to reduce fraud; and
- Block wire transfers when Western Union learns of potential fraudulent transfers.
Western Union Financial Services is a wholly-owned subsidiary of First Data Corporation, based in Greenwood Village, Colorado.