Jan. 19 (UPI) — The largest money service business in the world agreed on Thursday to a half-billion dollar settlement over charges they failed to protect customers from fraud and permitted their agents to illegally launder money for customers.
Western Union will pay a $586 billion fine after pleading guilty to charges of willfully failing to run an effective anti-money laundering program and aiding and abetting wire fraud with the U.S. Department of Justice, Federal Trade Commission and the U.S. Attorneys’ Offices of the Middle and Eastern districts of Pennsylvania, Central District of California and Southern District of Florida.
“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,” FTC Chairwoman Edith Ramirez said in a press release. “The agreements we are announcing today will ensure Western Union changes the way it conducts its business and provides more than a half billion dollars for refunds to consumers who were harmed by the company’s unlawful behavior.”
Based on a complaint filed Thursday in the U.S. District Court for the Middle District of Pennsylvania, Western Union violated U.S. laws when they processed thousands of transactions for Western Union agents and others as part of multiple national and international fraud schemes.
Among the allegations are criminals who contacted victims in the United States posing as family members, potential employers or people awarding some kind of prize asking for money to be wired to them. The company’s agents were often complicit in the schemes, the FTC said, and sometimes took a cut of the money.
Previous cases have also established that Western Union failed to halt the transfer of hundreds of millions of dollars to human traffickers in China and drug traffickers in other parts of the world, as well as not adhering to laws requiring verification and investigation of daily transfer limits.
The settlement requires Western Union to block money transfers to any person who is the subject of a fraud report, provide clear warnings to consumers about fraud on their paper and electronic forms, refund fraudulently induced money transfers if the company did not follow proper anti-fraud protocol and to increase the availability for how consumers can file fraud complaints.
Western Union will also be monitored by an independent auditor for its adherence to the telemarketing sales rule, which bars companies from processing transfers known to be fraud, or those the company “should know is payment for a telemarketing transaction.”
Western Union said in a press release it has increased compliance consistently during the last five years and has dedicated about 20 percent of its employees to compliance functions, noting the issues it settled Thursday occurred mostly between 2004 and 2012.
“We share the government’s goal of protecting consumers and the integrity of our global money transfer network, and we worked hard to resolve these matters with the government,” Western Union said in the release. “We are committed to enhancing our compliance programs to prevent illicit activity on our network and protect customers who transfer money to friends, family and businesses.”
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