Global financial services company Western Union has admitted to facilitating wire fraud and it has agreed to forfeit $586 million as part of a settlement with the U.S. Federal Trade Commission (FTC) and the Department of Justice.
Western Union’s services have often been used by fraudsters and cybercriminals, and authorities in the United States have been displeased with the fact that the company has failed to maintain a proper anti-fraud program.
Furthermore, the company has been accused of not taking immediate action against agents that knowingly processed fraud payments in return for a cut of the illegal profits. Since 2001, the Department of Justice has convicted 29 owners and employees of Western Union agents for their role in fraud schemes.
According to authorities, Western Union has violated several laws, including the Bank Secrecy Act (BSA) and the FTC Act.
The FTC said Western Union had received, between January 2004 and August 2015, more than 550,000 complaints regarding fraudulent transfers involving advance-fee, online dating, lottery, and family emergency scams. These transfers totaled more than $632 million, but they are believed to represent only a fraction as not all complaints have been logged, not all victims filed a complaint, and fraud-reporting mechanisms are not available everywhere.
As part of its settlement with the FTC and the Justice Department, Western Union has agreed to forfeit $586 million, a sum that will be used to compensate fraud victims. The process through which the money will be distributed will be established at a later date.
The company will also implement and maintain a comprehensive anti-fraud program, thoroughly vet new and renewing agents, and suspend or terminate agents that don’t comply with its policies.
The FTC has ordered Western Union to stop processing fraud-induced and telemarketing-related money transfers, provide more fraud warnings, create additional channels for fraud complaints, and refund fraudulent transfers.
MoneyGram, Western Union’s main competitor, was also targeted by the FTC. The company agreed to pay $18 million in 2009 to settle charges.
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