Washington, DC -- Attorney General Robert J. Spagnoletti announced today that Western Union Financial Services, Inc., has entered into an Agreement with the District of Columbia and 47 states, in response to concerns about the use of the company's wire transfer services by fraudulent telemarketers. Under the Agreement, Western Union will fund an $8.1 million national consumer awareness program and prominently display consumer warnings on the forms used by consumers to wire money.
The Agreement is the result of a high number of "fraud-induced transfers" by telemarketers who are often based in other countries. These telemarketers use a "lottery" scam, in which they tell vulnerable consumers they have won a large sum of money but must pay taxes or other charges in order to claim the winnings. The victims are then directed to send the money by wire transfer because it is fast, and allows for convenient pickup in multiple locations.
The problem of fraud-induced transfers is substantial. Based on a survey conducted by seven states1, it is estimated that over 29 percent of Western Union transfers in excess of $300 from the U.S. to Canada were fraud-induced. The number represents 58 percent of the total dollars transferred with an average of more than $1500 per transfer. Total American consumer losses to Canada in the year 2002 alone were estimated at $113 million.