Western Union admits to
aiding wire fraud, to pay $586 million
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[January 20, 2017]
By Joel Schectman and Diane Bartz
(Reuters) - Western Union Co, the world's biggest money-transfer
company, agreed to pay $586 million and admitted to turning a blind eye
as criminals used its service for money laundering and fraud, U.S.
authorities said on Thursday.
Western Union, which has over half a million locations in more than 200
countries, admitted "to aiding and abetting wire fraud" by allowing
scammers to process transactions, even when the company realized its
agents were helping scammers avoid detection, the U.S. Department of
Justice and the Federal Trade Commission said in statements.
With the help of Western Union agents, Chinese immigrants used the
service to send hundreds of millions of dollars to pay human smugglers,
wiring the money in smaller increments to avoid federal reporting
requirements, U.S. authorities said.
Fraudsters offering fake prizes and job opportunities swindled tens of
thousands of U.S. consumers, giving Western Union agents a cut in return
for processing the payments, authorities said.
Between 2004 and 2012, the Colorado-based company knew of fraudulent
transactions but failed to take steps that would have resulted in
disciplining of 2,000 agents, authorities said.
"Western Union is now paying the price for placing profits ahead of its
own customers," said Acting Assistant Attorney General David Bitkower.
A Western Union spokesman said that the company didn't "do as much as it
should have" to oversee its agents between 2004 and 2012 but is
committed to improving its procedures.
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People walk past a Western Union branch at Times Square in New York
November 30, 2011. REUTERS/Eduardo Munoz
Western Union, which helped clients move over $150 billion in 2015, said
in a press release that more than one-fifth of its work force is
currently devoted to compliance. It also said consumer fraud accounts
for less than one-tenth of 1 percent of consumer-to-consumer
The settlement will fund refunds for customers who were victims of
scams, authorities said. It will also implement a comprehensive
anti-fraud program to train agents to identify and stop transactions
that result from fraud.
Between 2004 and 2015 Western Union collected 550,928 complaints about
fraud, with 80 percent of them coming from the United States where it
has some 50,000 locations, the government complaint said. The average
consumer complaint was for $1,148, the government said.
Western Union reported revenues of $1.4 billion for the quarter that
ended on September 30, 2016, according to a government filing. The
company said it spent some $200 million a year on compliance.
(Reporting by Joel Schectman and Diane Bartz; Editing by Cynthia
Osterman and Andrew Hay)
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