SEATTLE – Attorney General Rob McKenna today announced a multi-state agreement with Western Union Financial Services in which the company will increase its efforts to warn consumers about wire transfer scams.
The agreement came about in response to concerns about the use of the company’s wire transfer services by fraudulent telemarketers. Under the agreement, Western Union will warn and help educate consumers about telemarketing fraud when they use the company’s services, and will pay nearly $8.2 million toward a national consumer awareness program.
McKenna underscored the importance of enlisting “third parties” like Western Union in the fight against consumer fraud.
“Cons have stolen millions of dollars from U.S. consumers through wire transfer scams including foreign lotteries, bogus advance-fee loans and fraudulent sales agreements,” McKenna said.
“Western Union can be proud of the efforts it has agreed to take to protect customers and help ensure that senior citizens and other vulnerable groups don’t fall prey to swindlers,” he continued.
U.S. residents lost an estimated $113 million in 2002 due to telemarketing fraud induced wire transfers to Canada alone, according to a 2003 survey conducted by seven states.
The same survey found that telemarketing fraud was a factor in more than 29 percent of Western Union transfers in excess of $300 that were sent from the U.S. to Canada in 2002. The average fraud-induced transfer amounted to more than $1,500. Moreover, fraud-induced transfers represented 58 percent of the total dollars wired during the survey period.
In response to these findings, Washington and nine other states formed an executive committee to work on behalf of state attorney general offices. The committee negotiated an agreement with Western Union that 1) warns consumers about wire transfer ploys, 2) educates high-risk consumers including seniors, and 3) changes some company practices.
Under the agreement, Western Union will do the following:
- Display prominent warnings on the front page of its Send Form, which is used for all transfers except those sent to Mexico. The new messages will run in English and Spanish and will warn consumers of the dangers of fraud-induced wire transfers. Similar warnings will be shared with individuals who initiate transfers by phone or online.
- Pay $8.129 million to fund a national peer-counseling programs, also known as “reverse boiler rooms,” to be overseen by the AARP Foundation. The programs will be designed to reach 3 million consumers over five years.
- Reimburse principal and 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.
- Circulate monthly anti-fraud e-mails to Western Union outlets, revise its outlet training video and manual to more strongly address the issue of fraud-induced transfers, and provide enhanced training to personnel who work at locations known to have a high level of fraud-induced transfers.
- Block 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.
- Electronically transmit consumer complaint information to requesting states.
- Increase its staff who combat telemarketing fraud and work to develop a computerized system to spot likely fraud-induced transfers before they are completed.
- Pay $400,000 in attorneys’ fees and costs, to be shared among the negotiating states: Arkansas, Massachusetts, New Jersey, New York, North Carolina, Ohio, Texas, Vermont, Washington and Wisconsin.
Western Union is a subsidiary of First Data Corporation, based in Greenwood Village, Colo. Western Union offers money transfer services by wire at more than 40,000 U.S. locations and 195,000 locations worldwide, including supermarkets, gas stations and drug stores. Western Union outlets are independent contractors.
The following states participated in the agreement: 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.
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