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For Immediate Release:  
For Further Information Contact:
November 14, 2005

Office of The Attorney General
- Peter C. Harvey, Attorney General


Lee Moore


AG Harvey Announces Settlement with Western Union Concerning Money Transfers

TRENTON – Attorney General Peter C. Harvey announced today that New Jersey has entered into a multi-state settlement agreement with Colorado-based Western Union Financial Services that addresses the problem of bogus telemarketers and others using the company’s money transfer services for fraudulent purposes.

According to Harvey, Western Union will, under terms of the agreement, pay $8.1 million toward a national consumer awareness program designed to reach 3 million consumers over a five-year period. The company has also agreed to place prominent consumer warnings on its Send Forms used for money transfers.

“This settlement agreement in the money transfer business is part of our continuing effort to keep New Jerseyans from being separated from their hard-earned money by fraud,” said Acting Governor Richard J. Codey.

“Clearly, the problem of fraud-induced transfers is substantial,” said Attorney General Harvey. “Through this agreement, we are ensuring there will be greater awareness among wire-transfer users of the potential for fraud, greater vigilance among Western Union agents whose job it is to conduct wire transfers, and a commitment by the company to reimburse customers who legitimately seek to avoid fraud by cancelling a transfer that is in progress.”

In addition, Harvey noted, Western Union has agreed to forward monthly anti-fraud e-mails to its wire transfer agents to remind them to be vigilant, and to provide enhanced training for agents who work in locations that have shown elevated fraud levels. Western Union has also agreed to reimburse any consumer who requests, prior to pick-up, that a money transfer be stopped, and who reasonably claims that the transfer was fraud-induced.

In addition to New Jersey, 46 other states and the District of Columbia have joined in the agreement with Western Union, a wholly-owned subsidiary of the First Data Corporation based in Greenwood Village, Colorado. New Jersey played a lead role in the Western Union matter by serving on a 10-state Executive Committee that explored the issues, negotiated with Western Union, and conducted a survey – along with six other states -- to gauge the scope of fraud-induced activity occurring via the company’s money-transfer services.

Lottery Fraud Schemes

According to Harvey, one example of the kind of fraudulent activity that consumers need to look out for is the “lottery” ruse. In that scam, unscrupulous telemarketers – often based in other countries – will advise 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 their payment by wire, ostensibly because wire transfers are faster, there are transfer agents in most communities, and funds can be picked up at multiple locations.

According to Division of Consumer Affairs Director Kimberly Ricketts, while Western Union has agreed to warn money transfer customers of the potential for fraud, and to make certain its employees are better-trained and more vigilant, she noted that New Jersey consumers can also protect themselves by approaching any request that they wire money with extreme care and deliberation.

“Consumers need to be judicious about where, and to whom, they are sending their money,” said Director Ricketts. “It also helps to be mindful, when contemplating a request from a stranger to send cash to secure one’s ‘lottery winnings’ or other prizes that, if a deal sounds too good to be true, it probably is.”

Background of the Western Union Inquiry

Seven states, including New Jersey, conducted a survey in 2003 of Western Union wire transfers in excess of $300 from the U.S. to Canada for a one-month period. The survey, which focused on U.S.-to-Canada money transfers conducted in the seven states in July 2002, found that more than 29 percent of those transactions were fraud-induced. In New Jersey, approximately 24 percent of the U.S.-to-Canada wire transfers scrutinized as part of the survey were confirmed to be fraud-induced.

New Protections for Consumers

Among the other key terms of the agreement ultimately negotiated are:

  • Western Union will develop a computerized system to spot likely fraud-induced transfers before they are completed, and increase the company’s anti-fraud staffing.
  • Transfers from specific consumers, or to specific recipients, will be “blocked” 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 electronically transmit consumer complaint information to requesting states.
  • Western Union agents who are involved in fraud will be terminated, and those agents who fail to take reasonable steps requested by the company to reduce fraud will be suspended or terminated.

“We believe this is a model agreement – one that is forward-looking and indicative, through its terms, of how seriously we take the issue of fraud-induced money transfers,” said Attorney General Harvey. “I credit Western Union with coming to the table and agreeing to work with us in implementing reforms that will help protect consumers in New Jersey, and throughout the nation.”

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