The Western Union, A global financial services company has admitted to facilitating a wire fraud and it has agreed to pay $586 million as part of a settlement with U.S. Federal Trade Commission (FTC) and Department of Justice.
The services of Western Union are used by many fraudsters and cyber criminals, and the authorities in the United States are very displeased with the company failing to maintain a proper anti-fraud program.
Moreover, the company was accused of not taking an immediate action against the agents that knowingly processed the fraud payments in return for a share of the illegal profits. Since 2001, Department of Justice has convicted 29 employees and owners of Western Union agents for the fraud schemes they are involved in.
According to the authorities, Western Union has violated many laws, those include the Bank Secrecy Act (BSA) and the FTC Act.
The FTC said that more than 550,000 complaints are received by the Western Union in between January 2004 and August 2015, regarding these fraudulent transfers involving online dating, lottery, advance-fee, and family emergency scams. All these transfers sums-up to more than $632 million, but all this is believed to represent only a fraction as not all complaints are logged and not all victims filed a complaint.
As a part of its settlement with FTC and the Justice Department, Western Union agreed to pay $586 million, a sum that will be used to compensate the innocent fraud victims. The process by which the money will be distributed will be established later.
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.