Washington DC | Dallas TX | Irvine CA
202.628.2000

WBK Industry News - State Regulatory Developments

Wire Transfer Service Company Settles With 49 States and the District of Columbia Over Complaints of Third-Party Fraud Schemes

A wire transfer service company entered into a joint settlement agreement to resolve a multistate investigation involving 49 states and the District of Columbia. The lone state that did not participate was California. The investigation sought to determine how third-party scammers used the company’s wire transfer services to take advantage of its customers.

The settlement requires the company to develop and implement a comprehensive anti-fraud program to detect and prevent fraud that causes customers to wire money to scam artists. The company will place anti-fraud warnings on the front page of its money transfer forms, provide mandatory training for its agents, escalate inquiries when areas have fraud complaints over a certain threshold, monitor agent activity, and provide prompt and appropriate discipline when agents fail to follow the proper and required protocols. The company will pay $5 million to cover the costs and fees associated with the states’ investigation.

This settlement comes on the heels of a related $586 million settlement with the U.S. Department of Justice, wherein the company admitted it had allowed fraud to continue even after red flags were raised or it should have detected the fraud. Scammers had contacted customers pretending to be relatives who needed money to collect a prize or receive a job opportunity. Some agents of the company were alleged to be complicit in the scheme and allegedly received a cut of the money.

In a statement, the company announced that over the last five years its compliance funding has increased by over 200% and that it spends $200 million each year on compliance, with 20% of its staff dedicated to compliance work. It also emphasized that less than one-tenth of 1% of all of its transfers in the past 10 years involved fraud.