Oregon Department of Justice

Attorney General Ellen F. Rosenblum

Oregon Department of Justice - Attorney General Ellen F. Rosenblum
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AG ANNOUNCES AREEMENT WITH MONEY TRANSFER AGENT WESTERN UNION FINANCIAL

November 14, 2005

Attorney General Hardy Myers today announced that one of the world's largest national and international money transfer agents Western Union Financial Services, Inc. has entered into an agreement with Oregon and 46 other states and the District of Columbia, in response to years of concern about the use of the company's wire transfer services by fraudulent telemarketers. The company is a wholly-owned subsidiary of First Data Corporation with primary offices in Colorado.

Under the agreement, Western Union will, among other things, fund an $8.1 million national consumer awareness program and set out very prominent consumer warnings on the forms used by consumers to wire money. This agreement admits no violation of law but Oregon reserves the right, at any time, to file the document in Marion County Circuit Court.

"Fraudulent telemarketers operating in the United States and from other countries have over a decade scammed thousands of Oregon seniors, who lost their money after the use of a Western Union wire transfer," Myers said. "These fraud-induced transfers were involved in sweepstakes and international lottery scams, many targeting older consumers and advance-fee credit card and loan scams targeting Oregonians of limited financial means."

"One Oregon victim had approximately 50 transactions in a five-week period, losing thousands of hard-earned dollars," Myers explained. Data collected by Western Union in 2004 revealed 453 transactions with Oregon connections with more than $590,000 in losses.

The problem of fraud-induced transfers is substantial. Based on a survey conducted by seven states, it was estimated that over 29 percent of Western Union transfers in excess of $300 from the U.S. to Canada were fraud-induced, representing 58 percent of the total dollars transferred and an average of over $1500 per transfer. Total American consumer losses to Canada in the year 2002 alone were estimated at $113 million.

Under the agreement, Western Union will provide prominent warnings to consumers who transfer money by wire, education of high-risk consumers, and changes in company practices. The company has agreed to the following:

  • Prominent warnings to consumers of the dangers of fraud-induced wire transfers must appear in English and Spanish on a new front page of Western Union's Send Form, and comparable warnings are required for telephone and Web transfers.
  • Western Union will pay $8.1 million over five years for national peer-counseling programs to be overseen by the AARP Foundation and designed to reach at least 3 million consumers.
  • Western Union will reimburse the amount of any transfer plus fees to any consumer who requests, prior to pickup, that a transfer be stopped and who reasonably claims that the transfer was fraud-induced.
  • Western Union will send monthly anti-fraud emails to its agents, revise the company's agent training video and manual, and provide enhanced training to agents with elevated fraud levels at their locations.
  • Western Union will terminate agents who are involved in fraud, and suspend or terminate agents who do not take reasonable steps to reduce fraud.
  • Western Union will block wire transfers from specific consumers or to specific recipients when Western Union receives information from a state that there is reason to believe that fraud will occur, until such time as the consumer is counseled on fraud and requests resumption of the transfer.
  • Western Union will pay $400,000 in costs to be shared among the negotiating states of Arkansas, Massachusetts, New Jersey, New York, North Carolina, Ohio, Texas, Vermont, Washington and Wisconsin.

Attorney General Myers underscored the importance of enlisting "third parties" like Western Union in the fight against consumer fraud. "Western Union did the right thing when it stepped up to the plate and agreed to implement programs and changes to protect Oregonians and its customers," Myers said. "The consumer warning, in particular, is extraordinarily clear and prominent and should be used as a model for consumer disclosures by similar companies."

Consumers wanting more information about this agreement and other consumer protection issues may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392. Justice is online at www.doj.state.or.us.

Contact:

Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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