Wasden announces settlement with Western Union

Posted at 1:50 PM, Jan 31, 2017
and last updated 2017-01-31 17:08:17-05

Idaho Attorney General Lawrence Wasden Tuesday announced a multi-state settlement with Western Union concerning wire transfers that defrauded consumers.

The settlement stipulates that Western Union must now improve its anti-fraud business practices.

The settlement also requires Western Union to pay $5 million to states to reimburse them for the multistate investigation. Idaho will receive nearly $47,000, according to a news release from Wasden’s office.

“The grandparent scam, romance scams and the IRS scam are particularly active in Idaho right now,” Wasden said. “As part of this type of scam, the predator often asks for payment by wire transfer, because it’s fast, anonymous, and impossible for the consumer to recover. This settlement will help ensure Western Union institutes changes to help prevent scammers from preying on Idahoans.”

During the investigation, Western Union reported it had received more than 2,000 complaints from Idahoans about fraud-induced wire transfers between 2004 and 2015. The complaints allege victims lost a total of $2.4 million.

The settlement requires Western Union to implement an anti-fraud program to help detect and prevent fraud victims from using Western Union to wire money to scammers.

Western Union has also agreed to:

--include anti-fraud warnings on money wiring forms;
--provide its agents with training about fraud-induced wire transfers;
--improve its anti-fraud procedures when necessary;
--perform checks on agents who process money transfers;
--monitor its agents’ actions in preventing fraud-induced money transfers;
--and discipline agents who fail to follow required anti-fraud protocols.

Along with Idaho, 48 other states and the District of Columbia participated in the settlement.

The Federal Trade Commission and the Department of Justice resolved similar issues with Western Union on January 19. The federal settlement includes a $586 million restitution fund.

Western Union released a statement late Tuesday afternoon.

The company said: “We share the goals of the attorneys general and are committed to protecting consumers and the integrity of our global money transfer network from abuse by bad actors.

"That’s why we have significantly enhanced our compliance program in recent years by adding more employees with law enforcement and regulatory expertise, strengthening our consumer education and agent training, bolstering our technology-driven controls and having our Chief Compliance Officer report directly to the Compliance Committee of the Board of Directors. 

“Over the past five years, we have increased overall compliance funding by more than 200 percent and now spend approximately $200 million per year on compliance, with more than 20 percent of our workforce dedicated to compliance functions.

"The incidence of consumer fraud reports associated with Western Union money transfers has been extremely low – less than one-tenth of 1 percent of all consumer-to-consumer money transfer transactions during the past ten years.

"Over the last five years, the dollar value of reported fraud in consumer-to-consumer transactions, compared with the total value of all such transactions, has dropped more than 60 percent.”