New York Attorney General and Western Union Financial Services have entered into an agreement with New York and 46 other states to help combat the use of Western Union’s wire transfer services by fraudulent telemarketers.
As part of the agreement, Western Union will include “very prominent” consumer warnings about the dangers of fraud-induced wire transfers. The company will also pay $8.2 million to launch a national consumer awareness campaign targeted to those most likely to be scammed.
“The use of wire transfer services to defraud unwitting consumers is a persistent and serious problem in New York State, especially for some of our most vulnerable residents, such as senior citizens,” New York AG Eliot Spitzer said in a statement.
Spitzer said wire transfers are a favored payment form for illegal telemarketers and others to scam consumers out of substantial amounts of money with hooks such as sweepstakes, lotteries, advance fee loans and other schemes.
Western Union’s practices came under review in 2003 after several states received hundreds of complaints from consumers who had used its services to wire money to telemarketers in Canada and other foreign locations. A survey found that 38% of transfers from the U.S. to Canada during 2002 were fraudulently induced and represented an estimated 58% of the total amount of money transferred to Canada during that period, Spitzer said.
Under the agreement, Western Union will reimburse consumers who reasonably claim that a transfer was fraud-induced among other requirements.
Western Union Financial Services is a wholly owned subsidiary of First Data Corp.