S. E. Williams
“As a major player in the money transmittal business, Western Union had an obligation to its customers to ensure they offered honest services, which include upholding the Bank Secrecy Act, as well as other U.S. laws. Western Unions blatant disregard of their anti-money laundering compliance responsibilities was criminal and significant.”
Chief Richard Weber, Internal Revenue Service-Criminal Investigation
Hundreds of thousands of American citizens, many in California and some the inland region, who unknowingly fell victim to a Western Union fraud scheme between January 1, 2004, and January 19, 2017, are now being urged by the Federal Trade Commission and California State Attorney General Xavier Becerra to file an application for remission—all claims must be filed with the Commission by February 12, 2018.
As stated by acting U.S. Attorney Lappen, “Western Union’s failure to comply with anti-money laundering laws provided fraudsters and other criminals with a means to transfer criminal proceeds and victimize innocent people.”
According to the Federal Trade Commission (FTC), between 2004 and 2015, Western Union recorded more than 500,000 complaints totaling more than $630 million in losses because of wire fraud. Court documents indicated among its many violations, the company failed to terminate or discipline agents who repeatedly violated the Bank Secrecy Act (BSA) and Western Union policy.
The company’s other failures included the acquisition of a significant agent that Western Union knew prior to the acquisition, had an ineffective anti-money laundering (AML) program and had contracted with other agents that were facilitating significant levels of consumer fraud.
Although half a million complaints were recorded, it is difficult to know how many people were actually impacted by the company’s violations. Western Union has more than half a million retail locations worldwide, most are run by contract agents in a variety of businesses that range from independent mom and pop retail stores to major retail chains.
One U.S. Attorney told how the agency’s investigation also uncovered hundreds of millions of dollars being sent to China via Western Union in structured transactions designed to avoid the reporting requirements of the Bank Secrecy Act, and much of the money was sent to China by illegal immigrants to pay their human smugglers.
In 2014, Bloomberg Business Week reported Western Union processed about 31 transactions per second. This volume presents unlimited opportunities for fraud in the company’s money transfer business. This is also an indication that the more than half-million complaints received by Western Union and/or government agencies on this issue may be just the tip of the iceberg.
In January, Western Union admitted to anti-money laundering and consumer fraud violations and reached a $586 million settlement with the Justice Department, Federal trade Commission (FTC) and the Attorneys General of California, the Central and Eastern Districts of Pennsylvania and the Southern District of Florida. The company admitted guilt in other criminal violations as well that included failing to maintain an effective anti-money laundering program, in addition to aiding and abetting wire fraud. The FTC charged “Western Union hadn’t adequately protected people from fraud, and didn’t properly discipline problem agents.”
The multi-state settlement reached with Western Union, resolved a FTC investigation that focused on complaints by consumers who used the company’s wire transfer service to inadvertently send money to third parties involved in schemes to defraud consumers.
When California joined the settlement in April, People of the State of California v The Western Union Company, Becerra noted, “There is no excuse for Western Union to expose their customers to fraud.” And added, “Hardworking families trusted Western Union's services only to be ripped off.”
As noted in the complaint, Western Union was aware since at least January 2004, that “its system had regularly been used for fraud and that it had an identifiable subset of agents and subagents with high levels of fraud complaints.” FTC officials also confirmed wire fraud is an international problem that comes in various forms.
The various scams being deployed are wide-ranging. They include cons perpetrated against seniors about a grandchild in trouble who needs money wired right away; there are romance scams where someone has made a connection on a dating site and the romantic interest asks for money; there are sweepstakes scammers that ask consumers to send personal information right away to claim their prize; and of course there’s the notorious scheme involving alleged Nigerian businessmen who promise lots of money in exchange for passing a check through your bank account, just to name a few.
Now, as Western Union prepares to make restitution, the Federal Trade Commission is warning consumers who were already victims of these scams, not to get scammed again.
FTC officials noted, “scammers follow the news.” As a result, they are fairly confident, scammers know about the settlement and are preparing to take full advantage of the Western Union repayment process as an opportunity to create a new scam—this time by preying on people wishing to file for reimbursement from Western Union. The agency warned consumers, “If anyone offers to help you process your claim, say NO! They only want your money.”
FTC officials stressed, “You do not have to pay to get your money back. Don’t pay anyone who says they can file a claim for you.” According to the agency, nobody associated with the process will ever call you to ask for your bank account or credit card number. “It’s free to file your claim form, and you can only do so online or by mail.”
FTC Associate Director, Division of Marketing Practices, Lois Greisman, made the scam warning as clear as possible when she stressed, “Anyone who asks for money upfront is running a scam."
Beginning November 13, approximately 500,000 claim forms were mailed to consumers who already had complaints on file against Western Union to the company itself, the FTC, or another government agency. It is important for readers to be aware, mailed forms were sent by Gilardi & Co, which is the company hired by the DOJ to handle the claims.
Those who used Western Union services between January 1, 2004 and January 19, 2017, filed a complaint and do not get a claim form in the mail are encouraged to refile on line at www.ftc.gov/WU.
If you have not yet reported your loss, believe you qualify for restitution and meet the other eligibility requirements, you are encouraged to file a claim even if you no longer have access to your paper work. According to the FTC, “If you don’t have documentation, you can still complete the claim form and give as much information as you have. DOJ will use the information you give them to try to validate your Western Union money transfer.” Also, if you sent multiple money transfers related to a scam, you can file claims for all the money transfers that occurred during the impacted period (January 1, 2004 through January 19, 2017).
The claim process is straight forward and the form is easy to complete. The most important point to remember is that your claim must be filed no later than February 12, 2018. You can file online at www.ftc.gov/WU or by phone if you do not have access to a computer, just call (844) 319-2124.
The Department of Justice (DOJ) and the United States Postal Service (USPS) will handle verification of the claims. According to the FTC, the agencies will primarily look at the information provided by consumers and attempt to verify it via records maintained by Western Union to confirm the transfer was sent. Currently, these agencies have no plans to call the claimants.
After your claim is verified, the amount you get will depend on how much you lost and the number of people who submit valid claims. Only the amount you transferred via Western Union is eligible for a refund. Other expenses like Western Union fees, other losses, or transfers sent through other businesses are not eligible for a refund. The FTC cautioned it may take up to a year to process and verify the claims and determine who is eligible to get a payment.
California Attorney General Becerra reminded Californians that in addition to consumer refunds under the federal settlement, the multi-state settlement included a permanent injunction that requires Western Union to establish an anti-fraud program designed to help detect and prevent scam artists from using wire transfer services to victimize consumers in the future.
Inland residents are reminded this was not the first time Western Union violated the public’s trust. In 2002, the company also reached a multi-million-dollar settlement with several states for wire transfer fraud.
When Western Union agreed in January to this most recent wire fraud settlement, FTC Chairwoman Edith Ramirez said, “Western Union owes a responsibility to American consumers to guard against fraud, but instead the company looked the other way, and its system facilitated scammers and rip-offs.”
The recent agreements she confirmed, were designed “to ensure Western Union changes the way it conducts its business.”
To review the Western Union settlement visit https://www.ftc.gov/news-events/press-releases/2017/01/western-union-admits-anti-money-laundering-violations-settles.