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.”