Western Union settlement highlights risk of wire transfer scams

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Western Union settlement highlights risk of wire transfer scams

More than 39,000 residents in Texas will receive compensation for money transfer frauds involving the Western Union. Last month, the U.S. Department of Justice announced that the money transfer giant will pay a total of $586 million to compensate victims of the fraudulent activities through the company’s money transfer service.

As part of the settlement, the money transfer giant also agreed to pay $5 million as settlement for anti-money laundering and consumer fraud violations. The company reached this compensation agreement with Texas and 48 other states that were affected most by the violations.

In both cases, Western Union also agreed to implement anti-fraud steps to prevent fraudulent activities through its wire service and to monitor and train its agents on fraud based wire transfers.

“This settlement is a clear indication that scam pioneers are always looking for new tricks to fool people into sending them money, including well-orchestrated schemes purportedly involving contests, lotteries, romantic interests and family members. The Western Union has agreed to implement an anti-fraud program, which is aimed at helping unsuspecting consumers to safely send funds and avoid being conned by crooks,” reads a statement by Texas Attorney General Ken Paxton.

According to the report released by the Federal Trade Commission, an estimated 2,000 Western Union agents were involved in fraudulent transactions and other consumer fraud violations between 2004 and 2012. The report also said that during this period, the company knew that its agents were processing fraudulent transactions but did not take any actions.

According to the federal complaint filed by the Federal Trade Commission, the company’s money transfer system has been used by international criminals in the United States and across the world. It also stated that the system is the preferred payment method for various scams.

“Between 2004 and 2015, the company received more than 500, 000 complaints about fraudulent transfers. The total amount lost through these fraudulent activities was more than $600 million. More than 80% of the complaints in the company’s database involved the United States consumers,” the FTC said.

Attorney General’s office said that more than 39,000 residents in Texas had previously filed complaints about fraudulent transactions through the Western Union. The office also said that the United States federal government will choose third-party settlement personnel and send notices to eligible consumers by reviewing Western Union’s databases and consumer complaints.

The Department of Justice has created a website for Texas victims to check on the progress of restitution. The amount of money each victim receives will depend on the type of complaint launched and the total amount lost.

According to the last year’s Top Ten Scam Report compiled by the National Consumers League, wire transfer is the most common form of money transfers used by scammers. The report said that it comprises of 39% of payment methods last year.

However, there are other several ways fraudsters scam people. According to the report filed by more than 7,000 victims to Fraud.org, debit cards and credits cards scams also ranks top of the list of ways fraudsters scam people, around 12%, and 30% respectively.

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