Western Union Unlawfully Invests, Earns Interest On Money from Failed Transfers, Class Action Alleges

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A New York consumer claims in a proposed class action lawsuit that Western Union illegally held and used money he deposited for a wire transfer for its own commercial benefit.

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The sprawling 131-page lawsuit challenges the allegedly “unfair and deceptive” practice whereby Western Union Company and subsidiary Western Union Financial Services accept deposits intended for transfer and then hold onto customers’ money for “many, many years” if the wire transfer fails or is not completed. The suit alleges that during the time a consumer’s untransferred funds are held, Western Union categorizes the money as a “settlement asset” and uses it to earn interest or make investments for its own financial gain.

What’s more, the case contends that when—if ever—Western Union returns the money to the consumer, the company does not share with them any of the interest or financial gains it has accrued on their funds, which it invested without their knowledge or permission.

“Western Union benefits financially by holding and using the customer’s money to make money for itself while the customer comes out of the transaction worse off financially because they have been deprived of the use and benefit of their money, money which belongs to the customer since it was never transferred by [the defendant],” the complaint summarizes. “It’s a win-win for Western Union and a lose-lose for the customer.”

According to the filing, the plaintiff in 2015 deposited $400 for transfer through Western Union. However, the man says that he received more than five years later, in 2021, a letter from the defendant informing him that his money had never been transferred to the intended recipient, and the company had been holding the funds ever since.

Per the lawsuit, after the plaintiff requested a return of his money from Western Union, he received a check for $370. Not only was the check $30 less than his original deposit, but it did not include payment of any interest on the money that the company had benefited from since 2015, the suit charges.

The lawsuit looks to represent any individuals or entities in the United States who deposited money with Western Union, whose money was not transferred but was used to invest for the company’s own benefit, and who were not paid any interest upon return of the money.

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