Class Action Accuses Western Union of Participating in Wire Fraud

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A proposed class action claims Western Union has since at least 2004 allowed its customers to fall victim to wire transfer fraud and, in some cases, helped facilitate fraudulent activity. Filed against the Western Union Company; Western Union Financial Services, Inc.; the companies’ CEO; and unnamed officers, directors, and agents, the suit accuses the defendants of “cheating [their] customers out of hundreds of millions of dollars” by allowing criminals to exploit their money transfer business.

The case claims the defendants have failed to adequately investigate suspicious transactions; ignored the vast number of consumer fraud complaints and warnings from government agencies; neglected to properly train their agents; refused to conduct compliance reviews; and even participated in fraudulent transactions in order to “take a cut of the ill-gotten proceeds.”

The lawsuit alleges that Western Union benefits from processing fraudulent transactions because it charges consumers a fee for its money transfer services. As explained in the complaint:

“Once Western Union’s Agents have paid out the funds, Western Union’s policy typically is that the sender cannot obtain a refund from Western Union of either the amount transferred or the money transfer fee, even if the sender was a victim of fraud or the money transfer was paid out to someone other than the intended recipient.”

The suit alleges that some potentially corrupt Western Union agents have collected more than 50 percent of their pay volume through processing fraudulent transactions. Even further, the case claims the defendants, in many cases, have failed to investigate and discipline these agents and have instead allowed them to continue operating without consequence.

The complaint cites several investigations conducted by federal and state government agencies, including the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC), that chastised the defendants for negligently allowing or participating in wire fraud.

“Due to the DOJ and FTC investigations,” the case reads, “Western Union agreed to forfeit $586 million and make the funds available to individuals who were defrauded through the Company from at least 2004 to 2017.”

The lawsuit argues, however, that the funds offered are “insufficient to cover the damages of every person who was defrauded” by the defendants between 2004 and 2017. The plaintiffs claim they were unaware of the investigations and have yet to be reimbursed for the damages they suffered due to wire fraud. Further, the lawsuit asserts that despite the recent state and federal payouts, Western Union has not been given any release from potential Racketeer Influenced and Corrupt Organizations Act—RICO—liability.