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YOU MAY BE A WINNER...OR GETTING CONNED
Western Union has agreed to pay $8.1 million to settle concerns that scam artists use the wire service to defraud consumers. Utah Attorney General Mark Shurtleff and Utah Department of Commerce Executive Director Francine Giani announced the agreement today between Western Union and Utah and 46 other states. The money will be used for a national consumer awareness program to protect people from being misled into giving money to fraudulent telemarketers and other criminals.
"When these con artists say you win, you lose," says Attorney General Mark Shurtleff. "We hope this consumer awareness campaign will convince people they don't need to give money in order to claim a legitimate prize."
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, transfer agents are available in most communities, and funds can be picked up in multiple locations.
"Once consumers send their money out of the country, its nearly impossible to get it back," says Commerce Director Francine Giani. "Western Union should be commended for recognizing the problem and doing something about it."
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. These frauds represent 58 percent of the total dollars transferred and an average of more than $1500 per transfer. In 2002, the total American consumer losses to Canada were estimated at $113 million.
In response to these findings, the states began negotiating an agreement with Western Union that would educate consumers who transfer money by wire and change some company practices. Some of the terms include:
- Prominent fraud warnings must appear in English and Spanish on a new front page of Western Union's "Send Form, " comparable warnings are required for telephone and web transfers.
- 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.
- 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 send monthly anti-fraud e-mails 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 to reduce fraud.
- Western Union will block wire transfers from specific consumers or to specific recipients when the company 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 Financial Services is a wholly-owned subsidiary of First Data Corporation, based in Greenwood Village, Colorado.
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