Class Action Claims Western Union Pockets Unredeemed Wire Transfer Money, Fails to Notify Customers

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A proposed class action lawsuit claims Western Union Company and Western Union Financial Services, Inc. intentionally fail to notify customers when money sent via wire goes unredeemed or when a transfer fails to go through. Instead, the case says, Western Union pockets the unclaimed wire transfer money to make financial investments and earn interest for itself while offering no opportunity for customers to remedy the issue until forced to do so by state law.

In fact, according to the suit out of Colorado, Western Union holds onto money from unsettled transfers for years without giving customers a chance to reclaim their funds. It is not until the law requires that the money be turned over to the state as unclaimed property that the defendant allows customers a brief opportunity to get their money back, the suit states.

“Only then, many years later and after making use of that money for its own benefit and financial gain, does Western Union attempt to notify the customer the transaction they paid for never transpired, or the money went unredeemed, and the customer has only a limited amount of time to claim the money…,” the lawsuit reads.

The suit further alleges that the defendant has additionally damaged customers by charging fees for funds returned from failed transfers. As the case tells it, this practice also helps line the pockets of Western Union at the expense of its customers:

“Under such circumstances not only does Western Union benefit financially from holding onto the customers’ money for years, Western Union then charges the customer a separate fee to get their money back; Western Union not only has its cake and gets to eat it too, but the customer suffers double-the-harm by not having the use of their money for years and then has to pay a fee to get it back.”

The case says the defendant “preys upon the unsophisticated and vulnerable” given that “typical” Western Union customers reportedly tend to be poorer, lower educated, and frequently use the defendant’s services due to their lack of access to a bank account. Immigrant rights groups have even sued the defendant in the past over its exorbitant fee structure, according to the case.

Western Union has also faced and settled a similar suit from consumers—Tennille v. Western Union Company—over its apparent practice of withholding money from failed transfers. According to the lawsuit, the defendant all but “brags” about its possession of funds from unsettled transfers to investors, stating that the money gives the company access to over $100 million in cash and are “better than an interest free loan.” Western Union reported that it had $3.8 billion worth in “settlement assets” from such failed transfers on hand in 2018, the lawsuit says.

The plaintiff in the suit claims she attempted to make a $100 transfer to her family in Romania in 2013, but the transfer was not completed. Western Union, according to the case, made no attempt to return the money or provide notice of the failed transaction until 2018.