Multistate Agreement Requires Fraud Warnings and A Nationwide Consumer Education Campaign
16 November – LAWFUEL – The Law News Network – Attorney General Eliot Spitzer today announced that Western Union Financial Services has entered into an agreement with New York and 46 other states to address the prevalent use of
the company’s wire transfer services by fraudulent telemarketers.
Under the agreement, Western Union will include very prominent consumer warnings on the forms used to wire money. These disclosures are aimed at warning consumers of the dangers of fraud-induced wire transfers.
The company also will pay $8.2 million toward a national consumer awareness program that is designed to reach the consumers most likely to be targeted by those who use wire transfer services.
“The use of wire transfer services to defraud unwitting consumers is a persistent and serious problem in New York State, especially for some our most vulnerable residents, such as senior citizens,” Spitzer said.
Western Union Financial Services, a wholly-owned subsidiary of First Data Corporation, is the world’s leading wire transfer company. Because Western Union transfers are immediate and difficult for law enforcement to track, wire transfers have become the favored payment form for illegal telemarketers and others engaged in fraudulent conduct, many of whom operate outside of the United States.
The agreement is intended to deter consumers from using Western Union and other wire transfer services to send money to entities that may be engaged in fraud. Scam artists often trick vulnerable consumers into sending substantial amounts of money through sweepstakes , lottery, advance fee loan and other common schemes.
New York and several other states commenced a review of Western Union’s practices in 2003 after having received hundreds of complaints from consumers who had used Western Union to wire money to telemarketers in Canada and other foreign locales.
The states then conducted a survey of Western Union customers, which revealed that an estimated 38 percent of wire transfers from the United States to Canada during 2002 were fraudulently induced, and that these transfers represented an estimated 58 percent of the total amount of money transferred to Canada during this period.
A group of state Attorneys General, led by a ten-state executive committee including New York, negotiated the agreement announced today. Under the agreement, in addition to providing prominent consumer warnings in English and Spanish on forms, on the Internet and during telephone transactions, Western Union will:
• Pay $8,129,000 for national peer-counseling (or “reverse boiler room”) programs to be
overseen by the AARP Foundation and designed to reach three million consumers over
• Reimburse the amount of any wire transfer and applicable fee to any consumer who
requests, prior to pickup of a transfer, that a transfer be stopped and who reasonably
claims that the transfer was fraud-induced;
• Distribute monthly anti-fraud e-mails to agents, revise its agent training video and agent
manual to address the issue of fraud-induced transfers, and provide additional training
to agents at locations where there has been a high incidence of fraud;
• Terminate agents who are involved in fraud and suspend or terminate agents who do
not take reasonable steps to reduce fraud;
• “Block” transfers from specific consumers or to specific recipients when Western Union
receives notice from a state authority 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
• Develop a computerized system to spot likely fraud-induced transfers before they are
completed, and increase its anti-fraud staff; and
• Pay $400,000 in costs to the participating states.
Joining New York in this agreement with Western Union are: 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; 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 and the Northern Mariana Islands.
For New York State, this case is being handled by Assistant Attorney General Mark Fleischer of the Consumer Frauds Bureau.