Western Union to Pay $586 Million as Compensation for Allowing Money Frauds

Western Union has been fined $586 million for allowing money frauds and money laundering through the hands of its agents within the United States and other countries of the world where the money transfer company operates, Reuters reports.

The US Department of Justice and the Federal Trade Commission proved beyond all reasonable doubts that Western Union actually looked the other way while scammers used its service to transfer huge amounts of money to cohorts in other countries, with Americans being the most affected victims of the fraudulent transactions.

Western Union to Pay $586 Million as Compensation

Incidentally, Western Union agreed “to aiding and abetting wire fraud” while an official of the company admitted that they never did “as much as it should have” to prevent the money frauds taking place with several transactions – made possible by over 2,000 money agents despite the many complaints the company received from disgruntled customers.

Investigations revealed that immigrants within the US used the money transfer service to pay others back home who engaged in human trafficking to the US; while others simply defrauded US customers by promising nonexistent jobs and prizes, while the company’s agents did little to nothing to prevent these scams.

Many of these scams took place between 2004 and 2012 but the company did nothing to prevent them or to sanction erring agents. With over 50,000 Western Union centers in the US, the company received about 550,928 complaints between 2004 and 2015 with 80% of these complaints filed by US customers. Most of the complainants were defrauded an average of $1,148.

Western Union now admits its fault and will be paying out $586 million as compensation to placate victims of the scams, and it has promised to deploy one-fifth of its workers to preventing money laundering and frauds. It will also set up an anti-fraud program to educate and assist agents against wire frauds and other unholy practices.

The company earned $1.4 billion as revenue for the quarter that rounded off by September 30, 2016 but said about $200 million is now spent annually to combat wire frauds, plug money transfer loopholes and heighten fraud detections.

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