53 ms·

Western Union admits to aiding wire fraud, to pay $586M

• devoply 10y ago
  This is really good. Perhaps now they will put some controls in place to try to reduce this. Don't want granny sending money to con artists via Western Union.
  • teej 10y ago
    Maybe the Nigerian scammers are still using Western Union but other scammers have moved on. Cryptolocker attacks use bitcoin, fake "computer locked down" scams use Bluebird or other reloadable cash card, and phone scammers use iTunes gift cards.
    • phrygian 10y ago
      Who are the Nigerians?
      • overcast 10y ago
        People from Nigeria.
      • r00fus 10y ago
        http://www.snopes.com/fraud/advancefee/nigeria.asp http://www.snopes.com/fraud/advancefee/nigeria.asp
      • metaphorm 10y ago
        https://en.wikipedia.org/wiki/Advance-fee_scam https://en.wikipedia.org/wiki/Advance-fee_scam
        • phrygian 10y ago
          Quote from the article: Online versions of the scam originate primarily in the United States, the United Kingdom and Nigeria, with Ivory Coast, Togo, South Africa, Benin, the Netherlands, and Spain also having high incidences of such fraud I suggest the parent takes some time, do a little study and call a criminal act what it is, rather than lazily labelling 200m people as scammers. Edit: grammar
          • dpark 10y ago
            On the one hand, I'm sympathetic to concerns about insulting a large group of people. On the other, "Nigerian scam" is an extremely common way to refer to this, and is more specific than "advance-fee scam" which covers a class of similar scams. I don't think the name "Nigerian scam" is good but it is the name many people know. Also, there's no citation for the "primarily in the United States, the United Kingdom and Nigeria..." claim. The reference to Encyclopedia Britannica is dead and presumably was for the "419" name since that's the sentence it's actually on.
          • metaphorm 10y ago
            I'm not sure what you're suggesting or whom you are addressing. AFAIK, the reason the country of Nigeria is frequently associated with advance fee scam probably has more to do with a particularly famous example of a scam phishing email, where the email writer claims to be a Nigerian prince cut off from his substantial family fortune due to political issues of some kind.
            • JoeAltmaier 10y ago
              Or maybe that town in Nigeria, that is dedicated to internet scams? http://www.africamasterweb.com/AdSense/419NigerianTownScammersTargetWest.html http://www.africamasterweb.com/AdSense/419NigerianTownScamme...
      • sqeaky 10y ago
        Dear Sir: I have been requested by the Nigerian National Petroleum Company to contact you for assistance in resolving a matter. The Nigerian National Petroleum Company has recently concluded a large number of contracts for oil exploration in the sub-Sahara region. The contracts have immediately produced moneys equaling US$40,000,000. The Nigerian National Petroleum Company is desirous of oil exploration in other parts of the world, however, because of certain regulations of the Nigerian Government, it is unable to move these funds to another region. You assistance is requested as a non-Nigerian citizen to assist the Nigerian National Petroleum Company, and also the Central Bank of Nigeria, in moving these funds out of Nigeria. If the funds can be transferred to your name, in your United States account, then you can forward the funds as directed by the Nigerian National Petroleum Company. In exchange for your accommodating services, the Nigerian National Petroleum Company would agree to allow you to retain 10%, or US$4 million of this amount. However, to be a legitimate transferee of these moneys according to Nigerian law, you must presently be a depositor of at least US$100,000 in a Nigerian bank which is regulated by the Central Bank of Nigeria. If it will be possible for you to assist us, we would be most grateful. We suggest that you meet with us in person in Lagos, and that during your visit I introduce you to the representatives of the Nigerian National Petroleum Company, as well as with certain officials of the Central Bank of Nigeria. Please call me at your earliest convenience at 18-467-4975. Time is of the essence in this matter; very quickly the Nigerian Government will realize that the Central Bank is maintaining this amount on deposit, and attempt to levy certain depository taxes on it. Yours truly, Prince Alyusi Islassis
        • protomyth 10y ago
          I know more than one English teacher that absolutely hate the fact that the current "Nigerian" e-mails in order to skip past spam detectors have better grammar than some of their students.
          • abraae 10y ago
            Its fairly well documented that "Nigerian scammer emails" deliberately use poor grammar so as to filter out people in the smarter end of the target pool, since those people will never fall for their story and will just waste the scammer's time. Which makes your English teacher's chagrin even more justified.
      • 0xfeba 10y ago
        https://duckduckgo.com/?q=409+scam&ia=web https://duckduckgo.com/?q=409+scam&ia=web
    • deleted 10y ago
      [deleted]
    • hibikir 10y ago
      This is mostly about phone scammers, pretending to be from either law enforcement, the IRS or, in the right country, to have kidnapped a family member. They don't rely on the victim having a computer, but just a cell phone. They just use high pressure tactics that don't give people time to think.
    • chirau 10y ago
      Please do not generalize your remarks to 'Nigerians', if anything specify 'Nigerian scammers'. As it is, you are earmarking a whole country with a negative connotation.
      • teej 10y ago
        This is clearly what I meant, I apologize if it got misinterpreted.
      • deleted 10y ago
        [deleted]
    • phrygian 10y ago
      I think that if you have ever been in a position where such broad brush generalisation affects you, an otherwise decent and hardworking individual, personally in a really negative way, you will understand why it is not right to make these sort of statements.
• 37 10y ago
  >Between 2004 and 2012, the Colorado-based company knew of fraudulent transactions but failed to take steps that would have resulted in disciplining of 2,000 agents, authorities said. So there were 2,000 Western Union employees in on this scam? That sounds like a huge number. Also, a $586m fine for a company that makes $14b a quarter? Is that stardard?
  • batbomb 10y ago
    agents are not employees. They are just people at stores. Source: I worked at customer service at a grocery store and had to do that. There was (at the time, ~2006), no official training. The most I ever wired was about $12k to Africa for a family that was immigrating, most wires (90%) were to latin america for about ~$1-300 or emergency help to family for a few hundred as well.
  • guntars 10y ago
    The article says that their quarterly revenue was $1.4 billion.
  • rayiner 10y ago
    > Also, a $586m fine for a company that makes $14b a quarter? Is that standard? It could be quite fair depending on the scope of the fraud. Fines at all levels in the U.S. are roughly based on the scope of wrongful activity, not income. Two people both speeding 10 mph over the limit don't get fined different amounts based on their income.
    • vincnetas 10y ago
      Actually they do in Finland. Traffic fines are proportional to income. I think same is in Sweden. https://mobile.nytimes.com/2015/04/26/world/europe/speeding-in-finland-can-cost-a-fortune-if-you-already-have-one.html https://mobile.nytimes.com/2015/04/26/world/europe/speeding-...
      • johansch 10y ago
        No, traffic fines are not proportional to income in Sweden. Fines for more serious crimes are though. https://polisen.se/en/Languages/Laws-and-Regulations/Fines/ https://polisen.se/en/Languages/Laws-and-Regulations/Fines/ *) Except DUI. That's a "more serious crime". Prison/similar and/or a fine proportional to your income.
• johansch 10y ago
  I'm pretty sure the real damage is at least 100x larger than that. But hey, this will allow some US authority to declare victory and their heads will get bonuses/promotions. The $586M mentioned covers 8 years (2004-2012). So $73M/year. In 2015 they moved $82B. Edited: This settlement is saying the amount of money they move fraudulently is less than 0.1% of their total money movements. This seems entirely implausible. 10% seems a lot more plausible.
  • diogenescynic 10y ago
    >I'm estimating about 30-50% of that is fraudulent. What are you basing that on?
    • zymhan 10y ago
      Hey, you have to work really hard to pull that sorta stuff out of thin air.
    • johansch 10y ago
      Yeah, that was a bit rushed :). I edited my comment, please re-visit it. (And yeah, it's still an estimate, since no-one except WU has any possibility of knowing the truth. Still, 0.1% seems fraud seems like an awefully low estimate, doesn't it?)
      • nickff 10y ago
        How does being rushed justify a complete an incendiary allegation based on a WAG? Do you have any basis for this allegation, or is it just an "Obama was the head of the illuminati, because, someone's gotta be heading the illuminati"-type guess? You revised it down to 10% now; why? Don't get me wrong, 10 is a great number, much better than 11, but I still don't see any rationale.
        • johansch 10y ago
          No, it was a Wild-Ass-Guess based on my instinctial knowledge of how money they are moving around yearly and how much is likely fraud. To add a perspective: They paid about a penalty for about a 1/1000th of the money they move around. What's your guesstimate for how much of WU money is based on fraudulent transfers?
• rs999gti 10y ago
  I got hit by credit card fraud related to this story. I either got skimmed at a gas pump or at a restaurant. What I saw were 4 Western Union transactions on my card, each for $255 USD. Two per day with this string - "WU*XXXYYYZZZZ" - where XXXYYYZZZZ is a phone number. My issuer shut down the card and issued me another one. I was not responsible for the charges. Also, the issuer said the reason they did not send me a fraud message was because the charges were occurring around the holidays where large charges are commonplace.
  • viraptor 10y ago
    Makes me wish that banks provided some easy self-protection checkboxes. Much like you can disable international calls and premium services with most mobile providers, I'd like to say "mark western union as fraud, unless I confirm it on the phone first".
    • kalleboo 10y ago
      One of my debit cards lets you disable and enable specific continents, card not present, and non-3DSecure transactions on their internet banking.
      • rconti 10y ago
        If only I could disable ONLY 3DSecure transactions.
    • modeless 10y ago
      I wish they provided the opposite. They are constantly deactivating my card or changing my card number when I've never had a single actual fraudulent transaction on my account. In the event that my card is stolen, I'm not liable, they are. By deactivating my card they're not protecting me, they're protecting themselves, by inconveniencing me.
      • shawn-furyan 10y ago
        So... you want no fraud liability, but don't want to be inconvenienced either?... You could always look for a less zealous credit card provider, but generally speaking, the entity that takes the liability should be able to set the bar for risk. Otherwise you get subsidized risk taking, which has a way of getting out of hand. You may well find that credit card companies who are not very zealous about security are merely more successful at weaseling out of the liability that their customers assume they are taking. At the end of the day, fraud creates costs, and you can be sure that SOMEONE is paying those costs. If your credit card company doesn't seem very zealous about preventing fraud, then it's more likely that you are the one who will ultimately pay when the bill comes due.
• saycheese 10y ago
  Here's the US Justice Department, the Federal Trade Commission, and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) complaints: https://consumermediallc.files.wordpress.com/2017/01/wufsi-assessment-of-civil-money-penalty-1-19-2017.pdf https://consumermediallc.files.wordpress.com/2017/01/wufsi-a... https://consumermediallc.files.wordpress.com/2017/01/western_union_complaint-jan2017.pdf https://consumermediallc.files.wordpress.com/2017/01/western... _________ And the related official DOJ announcement covering the agreement: https://www.justice.gov/opa/pr/western-union-admits-anti-money-laundering-and-consumer-fraud-violations-forfeits-586-million https://www.justice.gov/opa/pr/western-union-admits-anti-mon...
• kolinko 10y ago
  Actually, you also have punitive fines - that's why that lady got $2M or so for the coffee burning her at McDonald's.
  • HeyLaughingBoy 10y ago
    I believe that was a settlement or a civil judgement, not a fine. Also, I'm not sure I'd be arguing legal issues with rayiner...
  • kobeya 10y ago
    Actually, no -- if you look into that specific case the jury awarded >$2m which was immediately reduced to $670k by the judge, and then settled out of court for a presumably smaller amount. Nearly all of it went to medical bills for this lady whose skin and genitalia had been burned entirely through by the near-boiling liquid. The "crazy lady gets insane punitive windfall for being too stupid to know that hot coffee is hot" was a PR effort by McDonald's and other firms in a (successful) attempt to get the laws changed so that such suits would be harder to bring in the future.
    • Karunamon 10y ago
      I realize we're on a tangent now, but I can't let that stand unchallenged. Mcdonalds' brewing/holding temperature was the recommended temperature for coffee by the the NCA, a coffee industry group, not to mention any number of enthusiasts. This is between 195F and 205F for brewing, and holding around 170-190F. A quick google search confirms this. ~195ish is also where home drip brewers are set. McDonalds' temperatures were not unreasonable or outside the norm. Most adults will sustain third degree burns with contact of 150F water for two seconds, a full 45 degrees lower. It is not reasonable to expect coffee to be brewed and held even at that temperature, let alone below it. Furthermore, Liebeck's burns and their location were sustained entirely because she put a styrofoam container (i.e. something easily crushed) between her legs to add cream&sugar outside the store - and then, sure enough, she crushed it. Given the absurd volume of coffee that they were selling even back then, which was brewed at identical temperatures, and did not result in any injury (on the orders of multiple millions of cups per day), I chalk this one up to 100% user error, judge be damned. The severity of her injuries do not even factor into the question of who was at fault. Coffee brewed correctly is extremely hot out of the serving container, and should be treated with appropriate care - including not putting it in a position where you can dump it on yourself. This case is a study in how emotional manipulation (poor old lady vs multinational corporation) works on the justice system. Mcdonalds would have done well to just pay her medical bills, even though they didn't actually do anything wrong or irresponsible, and be done with it.
• jgalloway___ 10y ago
  This case sets an interesting precedent. Similarly should gun manufacturers be penalized when their weapons are used in an illegal manner?
  • partycoder 10y ago
    I do not think this is the correct analogy. The analogy would be gun manufacturers helping customers avoiding detection after illegal usage of their weapon. In that case, yes. It's bad.
  • mox1 10y ago
    Well if the employees manufacturing the guns take payments from criminals to alter the guns in some way to help them do bad things AND the gun company knows it, but ignores it then yes they should.
    • protomyth 10y ago
      Given the direction of IoT devices, I hope the generic form (if the employees manufacturing the X take payments from criminals to alter the X in some way to help them do bad things AND the X company knows it, but ignores it then yes they should) of your statement is always true.
  • GavinMcG 10y ago
    Eh. I think you're misreading this a bit - it's not about the use of the service, it's about the fact that employees knew the service was being used illegally. So sure, if the manufacturer can be demonstrated to be aiding criminal behavior, then sure. The fact that a manufacturer doesn't sell direct is another reason to think there's no relation to this case.
  • RangerScience 10y ago
    No. But, very possibly, those who sell guns should be penalized when those guns are used in an illegal manner - given due process, etc etc.
    • deleted 10y ago
• ateevchopra 10y ago
  More I read about such stuff, more the idea of a "decentralized" financial system with "no trusted party" makes sense. Fiat has lot's of problems in this globalization. It was never meant to be used globally. It's time we upgrade! It's time for bitcoin.
  • kneel 10y ago
    I'm 100% on board with bitcoin but damn are we annoying with our proselytizing. I think bitcoin will slowly seep in as the solution to many problems as they arise. I don't think cramming down everyone's throat is going to help, it comes off very scammy.
  • andrewfong 10y ago
    If the problem is criminals using Western Union for money laundering and fraud, replacing it with a decentralized system of quasi-anonymous irreversible transfers seems like it would make things easier for said criminals. Unless your complaint is about the government stepping in to penalize Western Union. In which case, I misunderstood.
    • ateevchopra 10y ago
      Bitcoin's whole system is transparent. You can always see all the transactions happening. So there is no way one can hide. I recommend you reading this article for details. http://www.sciencemag.org/news/2016/03/why-criminals-cant-hide-behind-bitcoin http://www.sciencemag.org/news/2016/03/why-criminals-cant-hi...
      • cm2187 10y ago
        And that is why crypto-hackers use bitcoin!
      • luckystartup 10y ago
        There's absolutely no way of knowing who owns the addresses. We have a saying for this: "Hiding in plain sight."
• Kazamai 10y ago
  Western Union has also been aiding international fraud from romance scammers etc. Even though they know the sources are suspicious they still let people send large amounts of money to countries like Ghana and Nigeria.
  • partycoder 10y ago
    I do not think it is a good idea to make a blanket accusation over an entire country. Presumption of innocence, reasonable suspicion and burden of proof are core concepts of our justice systems for a reason.
    • OedipusRex 10y ago
      Damned if you do, damned if you don't.
    • abraae 10y ago
      But it would be perfectly reasonable - and not at odds with anyone's justice system - to set your fraud detection trigger such that: if (source.isSuspicious() && destination in ('Ghana', 'Nigeria')) { investigateFurther(); }
      • forgetsusername 10y ago
        >if (source.isSuspicious() What are the attributes of the source object that we need to determine if it's suspicious? That's the hard part.
        • johnmaguire2013 10y ago
          First time user of WU sending money to Nigeria or Ghana seems pretty reasonable to me.
          • TorKlingberg 10y ago
            Some people have family in Nigeria or Ghana, and everyone is a first time use once. The whole point of Western Union is sending money to places that don't have a solid banking system.
• partycoder 10y ago
  The golden age of scamming started when a Nigerian scammer sold a fictional airport to a bank director in Brazil for $242 million.
  • colejohnson66 10y ago
    Wow. That actually happened. His name is Emmanuel Nwude[0] [0]: https://en.wikipedia.org/wiki/Emmanuel_Nwude https://en.wikipedia.org/wiki/Emmanuel_Nwude
• halis 10y ago
  Uhhh, how many people are going to jail since they committed a crime?
  • backtoyoujim 10y ago
    What's great is that you have to use Western Union to send that person money while they are in jail
    • stronglikedan 10y ago
      I thought that JPay had a monopoly on that. EDIT: I guess it's not every state.[0] [0]https://www.jpay.com/PAvail.aspx https://www.jpay.com/PAvail.aspx
  • MilnerRoute 10y ago
    Money is being returned to the people who were conned into sending it over Western Union. (They're setting up a fund.) My guess is it's people with less education who actually truly needed the money. I'm putting my cynicism aside, because that really does sound like a good thing.
    • a3n 10y ago
      If I rob a house or a bank, and the money is returned, I still go to jail, court and prison. Same if I drive the getaway car. The people who actually, knowingly (hard to prove) did the aiding and abetting committed crimes and conspiracy to- crimes. They should be tried. The managers who likely pressured these crimes for revenue should be variously fired, banned from the money industry, and tried. But corporations get to buy their way out of jail.
      • MilnerRoute 10y ago
        Money being returned to victims - or perpetrators going to jail. Which is more important?
        • 10y ago
• cm2187 10y ago
  In other words, Western Union is guilty of not being zealous enough at being a quasi-law enforcement agency and investigating its customer transactions... To those cheering here, you should remember this next time you try to open a bank account or make a payment, and your bank wants to see a thousand of proofs and certificates before moving a finger.
  • julian_1 10y ago
    Ironically, I stopped using Western Union ten years ago because of all the completely inappropriate and personal questions they would ask whenever I tried to do a transaction. Questions that I would expect during airline screening and international travel - but not for a company who wants to win customers and business. It happened in enough destinations and different offices that I feel it had to be a policy.
    • digler999 10y ago
      I just used WU 2 months ago for a $400 international transaction and I wasn't asked anything other than to whom and where I wanted to send it. My beef is with paypal: the company that wants to look and act like and do everything that a bank does, but without all those pesky bank regulations designed to protect the customer. I quit using them 10 years ago.
      • tananaev 10y ago
        I guess it depends on the country. For example, in Russia PayPal is registered as a bank, so it has to comply with all regulations.
    • olegkikin 10y ago
      It's not WU's fault. If it were up to them, they would let you transfer your money to whoever, and take their (massive) cut. It's the KYC (CIP) and AML laws. https://en.wikipedia.org/wiki/Know_your_customer https://en.wikipedia.org/wiki/Know_your_customer https://en.wikipedia.org/wiki/Customer_Identification_Program https://en.wikipedia.org/wiki/Customer_Identification_Progra... https://en.wikipedia.org/wiki/Money_laundering#Anti-money_laundering_measures_by_region https://en.wikipedia.org/wiki/Money_laundering#Anti-money_la...
• hamandcheese 10y ago
  I find it amazing in this day and age that people even use Western Union, legitimate or not.
  • j_gu 10y ago
    Poorer people are the main clientele.
  • roywiggins 10y ago
    How else would you send money to someone across the planet if neither of you have bank accounts? You can hand WU cash and your recipient can get cash at the other end. "Just get a bank account" is not always an option.
  • dpark 10y ago
    I've never used Western Union, but if you want to send money across the world quickly, I'm not sure of a better way to get it done. Transferring a thousand dollars from my bank account to the bank account of a relative would likely take at least a couple of days. Just transferring from my online bank to my local credit union takes a couple of days. (Plus as others have noted, not everyone has a bank account.)
  • nilanp 10y ago
    Amazing there hasn't been a single mention of transferwise in this thread
• jlj 10y ago
  Didn't the Citizens United vs. FEC case argue that money is free speech, and therefore campaign finance laws limiting Super PAC's spending were overturned? How might that affect banking laws that require banks to flag suspicious transactions and restrict who can send and receive funds? Have the banking laws that restrict payments ever been challenged in court as a free speech issue? Just wondering if these two dots are in any way connected. I am not pro-money laundering but also don't like the idea of government overreach. Thinking that since banks are non-government that the constitutional protections don't apply, but what about the laws that bring about the banking regulations?
  • cderwin 10y ago
    I am not a lawyer, but I don't think so. Citizens United didn't rule that money was literally speech, but instead that laws prohibiting the expenditure of money on speech (i.e. a political ad) are impermissible impediments on protected speech. Fraud isn't protected speech, and money laundering isn't speech at all, so I don't think the first amendment comes into play at all. And yes, I don't think constitutional protections would apply to a bank simply refusing to be the medium for a financial transaction.
    • jlj 10y ago
      Helpful interpretation, thanks. What about if the expenditure is prohibited by mistake, is not fraud or money laundering, and it gets locked up in bureaucracy indefinitely? In that case it seems like protected speech could be restricted. Anyone know if constitutional law can be applied to quasi-government private organizations? At what point is an industry such as banking so regulated by government that it can't be distinguished from government?
  • inconclusive 10y ago
    This is a pretty compelling point!
• rick_perez 10y ago
  I find this interesting because I just saw a story in my local news about Western Union getting flack because they were making it difficult for certain customers to send money to known terrorist countries. They were called 'bigoted' and 'racist'. They really can't win here. If they allow anyone to send money anywhere, they get fined by the government for supporting criminals. If they try to make a judgment call, the public gets up-in-arms about it and thinks they are bigoted (and potentially lose customers or get involved in other lawsuits).
  • chx 10y ago
    It should be difficult but doable? I could understand a few questions...
  • tinalumfoil 10y ago
    > If they allow anyone to send money anywhere, they get fined by the government for supporting criminals. They could allow the transactions, but secretly support anything suspicious to government anti-terrorist agencies. They wouldn't get called racist because any transactions they block were at the behest of the government. They wouldn't get in trouble with the government because they're handing all their data to them. And customers wouldn't complain they're divulging private data customers people wouldn't know. It's a win-win-win.
    • wonder_er 10y ago
      Then it would just be the HN crowd mad that an organization is secretly passing data to the authorities...
      • PakG1 10y ago
        At least it would all be just a conspiracy theory espoused by tin foil hats until another Snowden shows up.
        • zeroer 10y ago
          If people couldn't be bothered with the actual Snowden leaks, surveillance of money transfers to Pakistan isn't going to move the needle either.
• jmcmahon443 10y ago
  I imagine someone at Western Union had the foresight to see this risk and save enough cash to pay the bill when it came.
• xs 10y ago
  I got hit with a Western Union scam when I was a teenager. I spent numerous hours on the phone with WU trying to get any information on who picked up the money. Name, id, or even city where they picked it up. WU understood I had been robbed but refused to help me. Apple should be next. Once I had an iPod stolen and Apple refused to help me recover it. They wouldn't give me the IP or geolocation of where it was or even tell me if it connected to iTunes and whos account it connected as. From these two events, I always felt that Apple and Western Union aided and protected criminals and thieves.
  • jdmichal 10y ago
    Of course, that could also lead to someone selling their phone, then having Apple provide them that same information. Would that also be a desirable outcome? If not, how is Apple to tell the difference between the two scenarios?
  • mlmlmasd 10y ago
    From my experience, most large companies have support policies that basically blacklist all forms of help that may incur cost for the company. What I found works quite often though, is drafting a formal letter (can be email) referencing your country's consumer protection act and sending it directly to the corporate office :). I've used this method with ISPs, Godaddy, a few other companies.
• OoTheNigerian 10y ago
  When it comes to fraud, no Nigerian past, present or cumulative can match American Robert Allen Stanford talk less, Bernie Madoff. So what is the point of all the Nigerian bashing here?
• rynop 10y ago
  Is this a class action lawsuit? My quick searches point to no. My elderly mother-in-law got scammed, and it was pretty ridiculous how WU allowed it to go through given the circumstances. Just wondering if/how to potentially get some of the $ back via this lawsuit.
  • jdmichal 10y ago
    Did she file a complaint? Others have mentioned that the money is establishing a fund to refund transactions, but I doubt you'll get far into that process if a formal complaint wasn't filed.
    • rynop 10y ago
      Nope. We went to the cops but they said they wouldn't even spend time investigating unless she was taken for 100 K or more. Given that information we figured it was moot. Too bad the exporters could not be fou too bad the exporters could not be exposed. Fn shame
• joshfraser 10y ago
  It's no secret who's using WU. Just count the number of locations they have in "hackerville" (pop ~110k) http://locations.westernunion.com/search/romania/vl/r%C3%A2mnicu%2Bv%C3%A2lcea http://locations.westernunion.com/search/romania/vl/r%C3%A2m...
• MilnerRoute 10y ago
  "Reuters seemed to suggest that nearly one out of every thousand transactions was fraudulent, reporting that Western Union 'said consumer fraud accounts for less than one-tenth of 1 percent of consumer-to-consumer transactions.'" https://yro.slashdot.org/story/17/01/23/0658205/western-union-pays-586m-fine-over-wire-fraud-charges https://yro.slashdot.org/story/17/01/23/0658205/western-unio...
• rayiner 10y ago
  To be more specific, Western Union consented to the imposition of a civil penalty by FinCEN and entered into a deferred prosecution agreement with the DOJ, for violations of the Bank Secrecy Act and aiding and abetting wire fraud. It also settled with the FTC for failing to mitigate fraud reported by consumers. Details here: https://consumermediallc.files.wordpress.com/2017/01/wufsi-assessment-of-civil-money-penalty-1-19-2017.pdf; https://consumermediallc.files.wordpress.com/2017/01/wufsi-a... https://www.justice.gov/opa/pr/western-union-admits-anti-money-laundering-and-consumer-fraud-violations-forfeits-586-million https://www.justice.gov/opa/pr/western-union-admits-anti-mon....
• joshmn 10y ago
  Didn't something similar happen with American banks? I don't remember them being fined this much. /s
• coryfklein 10y ago
  Key takeaway IMO: "the Colorado-based company knew of fraudulent transactions but failed to take steps that would have resulted in disciplining of 2,000 agents" Western Union was already aware of fraud they were facilitating, but did not take steps to either report or prevent it. It's one thing to not investigate suspicious behavior, it's another thing entirely to be aware of actual fraud, and ignore it.
• nkkollaw 10y ago
  This reminds me of how Google does nothing about AdWords frauds: try to forget disabling third-world countries and your website will all of a sudden be most popular in Nigeria and Afghanistan (that's what they said when I confronted them about it, that people in Nigeria where interested in the content even though it was in Italian). I guess when a big percentage of a company's profits come from fraud, they're not incentivised to fix the problem.
  • nrjdhsbsid 10y ago
    Wha? This is pure stupidity. If you choose to show ads in third world countries AdWords will show them constantly in those areas since the cost per click is so low. It's not their fault you used the default setting to minimize cost per click then turned on ads in places you weren't at all interest in.
    • nkkollaw 10y ago
      Since you're so bright, perhaps you can enlighten me as to why in a system that works, even with default settings most clicks will come from only 2 countries (but mostly Nigeria) out of 1000 other countries (including low-cost clicks), and why it would make sense from a Nigerian to click on an ad in Italian. Then, there's the problem of multiple (up to 10) clicks from the same IP within a couple of seconds. Last, why in Nigeria they only stay on websites for a fraction of a second, even though they scroll to the bottom of the page (which regular users often don't do).
• mch82 10y ago
  Scammers in a foreign country used Western Union to steal from my grandfather. Glad to see a penalty that will hopefully encourage W.U. to put better controls in place going forward. Chose to post this comment because I see a lot of people in the thread effectively asking "does this really happen" or "who are these stupid people that get scammed" and I figured letting the HN community know that at least one or our members has been personally affected might bring a different level of consideration to the topic. Edit: Seeing this headline feels great. I can't describe the feeling of frustration at not being able to help my family solve the case when the fraud happened or the extreme anger I felt that the scammers pretended to be a grandchild calling my grandfather for help, using one of our names to legitimize the scam. Ever since, I introduce my self by name when I call my remaining grandmother and I worry when she tries to recognize me before I have a chance to introduce myself. I hope no one else has to experience this.
  • nkkollaw 10y ago
    Unfortunately scammers will just use something else, until there will be nothing safe to use and they'll have to resort to bitcoins. Still, this is a step forward.
    • mch82 10y ago
      Absolutely. It's a never ending battle. I strongly believe that the most effective thing people can do is to help educate others about the existence of these scams and about the safe & secure use of technology. People can develop self-defense mechanisms and an intuition for when they may be getting scammed or phished.
• stevew20 10y ago
  And people are worried about Bitcoin...
• sjg007 10y ago
  Phh mortgage uses these guys and the whole thing is a scam. Phh mortgage needs to be shorted into bankruptcy. Fannie Mae shouldnt even allow them to service loans.
  • brainbrane 10y ago
    I refinanced just to get away from Phh. And I made sure my new lender didn't include in the contract the right to transfer servicing of the loan.
• deleted 10y ago
  [deleted]
• nilanp 10y ago
  Amazing there hasn't been a mention of TransferWise in this thread You get about 1.5% more money with them when you do a transfer. Their low cost model is driven by using automated KYC checks and the kinds of fraud models you'd expect from a web startup More here https://transferwise.com/gb/compare/western-union-exchange-rate https://transferwise.com/gb/compare/western-union-exchange-r... Disclosure - I'm an employee - but the hype in this case is warranted
  • MarkCole 10y ago
    Hi there, enthusiastic and regular Transferwise user here. I think the answer is that while Transferwise is a great product, Western Union serves a niche that Transferwise/PayPal/Web Startups aren't fulfilling. That is anyone even with low income can just go into a store and use it. No need for a bank account, a PC (even basic computer knowledge is not required which may hinder older people) or the internet.
    • fastball 10y ago
      I don't know about everywhere else in the world, but these days it's not too hard to get a free bank account in either the US/UK.
  • anon1385 10y ago
    >the kinds of fraud models you'd expect from a web startup Code written in Javascript by a fresh college graduate with no domain knowledge that you pulled from GitHub? When evaluating a financial service the last thing I ever want to hear is that it's run like a "web startup".
    • nilanp 10y ago
      I'd rather that - than run like Western Union. Lol
  • drited 10y ago
    Are Transferwise profitable and earning at least their cost of capital? While I hear your startup vs big guys point, I looked at the public companies in this industry before and was amazed at how much they do spent on compliance systems (much of which is for automated checks) and also of course on human checks/follow-ups. Two things stood out: 1. How unprofitable the smaller of the public players in this space (e.g. Moneygram) were as a result of regulators pushing for ever-higher reductions in fraud, using threats of the kind of action that was taken against WU as a stick. WU spends $200m a year on compliance, and if remember correctly unprofitable Moneygram just completed an $80m IT system upgrade. 2. In addition to the large up-front fixed cost for systems, how much ongoing variable compliance cost these companies have to spend because fraudsters are notoriously good at figuring out how to beat automated KYC checks. If Transferwise are just using automated checks and not the additional human reviews that WU uses (per the article 25% of their workforce are devoted to compliance) , aren't Transferwise just basically biding time until they get large enough to attract the attention of an attorney general due to the undiscovered fraudulent transactions going through the system? Then bam $586m fine like the one just handed to WU and you go out of business. How can a startup that charges 25% of the revenue of the only profitable public player in the space hope to cover the variable compliance cost required to mitigate this risk? I recognise that the argument often put forth is that the fintech startups match people on either side and hence take out the bid/ask spread on the exchange rate transaction, but doesn't this ignore that the largest money flows are uni-directional - i.e. remittance payments from immigrants in wealthy countries sending money back home? The matching breaks down if the money-flow is predominantly one-way. Genuinely interested in the answers to the above - I passed on an investment in the industry because I couldn't get comfortable with the above.
• roberto6 10y ago
  Wow! this is crazy. So glad they been ought!