If you were to discover that criminals were using your business to swindle your customers, you would likely feel your skin crawl. Then you would look for ways to crimp the swindlers' modus operandi.
Western Union is no exception.
The Denver-based money transfer company has launched counter-measures after suffering the indignity of having its resources systematically used by con artists to harvest money from victims - often the poor or the elderly - in cross-border fraud.
Western Union's tactics include educating its customers at the point of contact.
It cautions customers on its money-transfer forms about the perils of sending cash to strangers.
It also places restrictions on how the money can be picked up.
If the recipient lives in Nebraska, for example, he or she must collect the funds in that state or a neighbouring state.
In other countries, a recipient with a Barcelona address must pick the money up in Spain and not another country such as France or Britain.
The scams that Western Union is attempting to combat are many and varied.
For instance, the owner of a struggling trucking firm in Tuskegee, Ala. spots a newspaper ad for cheap, easy loans. She talks to the "loan officer" at the toll-free number, thinking the person is in Maine when in fact he is in a Toronto boiler room.
The "loan officer" agrees to lend $50,000 US, but tells the businesswoman she needs to send $1,500 in advance to cover "administrative" or other expenses. The dupe scrapes the cash together, transmits it via Western Union - and then does not get the loan.
Subsequent attempts to recover the money are met with a recorded message that the line is out of service.
Western Union, and other money-transfer firms, are unable to help at this stage. The cash transfers vanish into the ether and are untraceable, leaving these blood-sucking sociopaths free to feast on the sweat and trust of their victims.
Another con is the over-payment scam. You advertise in a trade journal that you have an expensive piece of seismic equipment for sale. Someone from Oklahoma responds and sends a cashier's cheque or money order.
When the cheque arrives, it's for $10,000 higher than the agreed amount. You phone the sender. He claims that it must have been a clerical error, "but go ahead and cash it anyway and transfer the excess amount back to us."
You do so, and the authentic-looking instrument later bounces because the "issuing bank" isn't in the habit of honouring counterfeit paper. This leaves you on the hook with your own bank.
Law enforcement agencies do their best to stop these criminals, forming cross-border partnerships and struggling to put their finite resources to their most effective use. However, the sheer volume of such frauds makes it difficult to keep up.
Better Business Bureaus and law enforcement agencies have been frustrated in years past over what seemed a blank, bovine response by the money-transfer industry to their concerns over criminals misusing its facilities.
"For the most part, when we hear of a victim and ask them how they sent their money, they indicate that it was through Western Union," says Leonard Crain, president of the BBB of West Georgia, East Alabama and Southwest Georgia.
"If they have processes in place to help customers at the retail level, I have yet to see them."
Police say most industry players are now onside in the war against fraud. "They are co-operating with us to whatever extent the law allows," says Det.-Sgt. Garry Hickey of the Toronto Police Service fraud squad telemarketing unit.
Last month, police chiefs in the United Kingdom unveiled a partnership with Western Union to crack down on consumer scams such as Internet auction frauds and bogus prize draws that suck up £1 billion annually from Britons.
Western Union's role is to give its agents extra training on how to spot potentially fraudulent transactions and issue warnings to customers who are unsure of the intended recipient of the funds.
What was announced in the U.K. is consistent with programs and procedures that Western Union has had in place in the United States for the past three years and what it now is developing in Canada, says Western Union spokeswoman Sherry Johnson.
In addition to the warning on Western Union's To Send Money form, the company trains its agents to pick up on "cues" in their conversations with customers.
Mention of the word "lottery," for instance, results in the customer being urged to contact Western Union's customer service team that is specifically dedicated to addressing consumer fraud issues, says Johnson.
The customer then is told in the plainest possible language, when warranted, that he or she will be fleeced if they go through with the transaction.
Johnson says Western Union's service is meant to send money to family or friends. "Money-transfer services really were not intended for doing business with a stranger - it's a cash-to-cash transaction."
Johnson says the top three scams seen by her company are online auction fraud - by far the No. 1 in the field - followed, respectively, by lottery/prize scams ("give us money, then we'll send you your winnings") and advance fee loan scams.
"It really is something that affects the whole population," Johnson says.
Det.-Sgt. John White of the Toronto police fraud squad is a national fraud expert who has had cause to suspect criminal ownership of some independently owned agencies.
"Corporately, we're getting assistance," says White, whose squad is a member of the Toronto Strategic Partnership against cross-border fraud that works with top American agencies such as the Federal Trade Commission.
White says criminals find money-transfer services a safer venue than banks. Banks have more stringent procedures, such as photocopying photo identification and placing it on file when a new customer opens an account.
Transferring funds through banks leaves a paper trail that is easier to follow.
However, White's colleague Hickey says the initiative that Western Union is taking to protect its customers is appreciated.
"They are putting more education and restrictions in place to make it tougher for the bad guys."
Protecting Yourself
* Do not send money to anyone you don't know.
* Remember that when you pay for goods or services through Western Union, you do so at your own risk.
* Discontinue any transaction in which you are coached how to respond to questions by Western Union.
* Ask yourself whether the offer sounds too good to be true.
* Beware if you have been overpaid for an item and the payor instructs you to return the excess amount by money transfer. Cashier's cheques and money orders can take up to a month to fully clear.
* Select a password that is unique and difficult to guess. Include letters and numbers. Change your password frequently.
Source: FAQs: Consumer Fraud Awareness (www.westernunion.com)
(Brock Ketcham is an Edmonton-based writer who specializes in consumer and public policy issues. He can be reached at brock@businessedge.ca)
