Scam victims and police are calling on Western Union to tighten its money transfer practices, because of a scam that is bilking Canadians out of millions of dollars by exploiting weaknesses in the money transfer business.
“I think they are part of it — big time,” said Paramjit Singh, a Mississauga, Ont., resident who was taken for approximately $3,000.
“They’re letting it happen. Because they should have stopped it right there,” said Sandra Bohnert, of Squamish, B.C., who wired $1,100 to scammers before she found out she’d been duped.
The scammers post "jobs" on the web under a fake company name and then hire people as "mystery shoppers" to supposedly work undercover for clients such as Western Union.
Victims said their market research "employer" had an address and phone number in Ontario, and the emails, calls and correspondence seemed very professional.
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'Total lie' played well
“I was aware of it that scams could happen, but they played quite well,” said Singh. "It doesn’t sound like a scam and there is a job to be done.”
Singh and Bohnert both have regular jobs, but applied for the chance to earn extra money. They said they were told their job was to test the security of Western Union’s money transfer system, at that company’s request.
“It’s so professional. They name big corporations that they work for and that they want you to work for, which is a total lie,” said Bohnert.
The victims each received a slick package, which included a cheque, written to them, for approximately $5,000. Their "supervisors" told them to deposit the cheque at their bank, then use the funds to send money via Western Union, at Money Mart and Wal-Mart locations.
“I feel so stupid. And I feel like I should have known better,” said Bohnert. “And a lot of people out there are going to think that too. Oh, she must be an idiot if she is going to do something like that.”
Singh and Bohnert said they were coached by their "supervisors" over the phone, while filling out the Western Union forms. They were told to make up names on the spot and send several money transfers to those fake recipients.
“She told me, ‘Western Union is aware of it. These transactions will not go through. The money will come back to you. At the end of the day, you will go back to Western Union and cash them out, because there is no one to receive these funds,’” said Singh.
“As the job description is 'Mystery Shopper,' obviously I am looking for loopholes … testing the limits of Western Union’s guarding system,” he said.
Most of the money transfers did go through, however, as the scammers exploited loopholes by pretending to test them.
Scammers picked up the cash immediately at other Western Union locations, even though the transfers were sent to made-up recipients and Western Union’s policy is to always check for proper ID.
“They don’t look at the IDs. Or maybe they aren’t very careful,” said Singh. “Because these names were totally fake. These were not real names. But somehow they cashed it.”
Soon afterward, the cheques the victims deposited in their accounts bounced, leaving them on the hook for the money. Bohnert said she began to suspect she had been conned, even before the cheque bounced.
“I got a bad feeling … so I phoned Western Union. The man I spoke to there said, 'I am sorry, you got scammed.'”
According to the Canadian Anti-Fraud Centre, $1.5 million has been stolen from Canadian victims of this particular scam, most of that in the last two years.
That’s likely just a fraction of the real number, because those are only the losses that were reported to police.
“We believe there are a lot of suspects out there. In my experience, in our investigations, there are people or suspects who do this as a living,” said Toronto police Det. Alan Spratt, who works full time trying to catch the scammers.
Questionable ID checks
He believes, in these cases, Western Union agents didn’t check for legitimate ID when the money was picked up, possibly because they were in on the scam.
“I have been involved in investigations where the agent didn’t follow Western Union's policies. For example, during the execution of one search warrant we found that one particular individual didn’t ask for ID from anyone,” said Spratt.
“We have investigated agents who were corrupt. We’ve charged agents of money transfer services in the past with criminal offences,” he said.
Western Union insists it has many security measures to detect scams.
“I can assure you that preventing fraud is one of Western Union’s top priorities,” said spokeswoman Anna Alejo.
“We specifically warn consumers not to use our services as occurred in the cases you reference. Western Union is not intended for use when sending money to people the consumer has not met in person.”
She added that the company pays financial incentives to agents who identify scammers.
“Western Union trains agents on how to detect and deter fraud at the point of sale. If an agent suspects a transaction is fraudulent, the agent is trained to refuse the transaction or report it to Western Union for further investigation.”
Western Union silent about these cases
The company won’t talk about these cases, though, or explain why its agents handed the money over to scammers who couldn’t have had legitimate ID.
“In general, where the individual has presented identification in the correct name, where the photograph on government-issued ID matches the individual requesting payout and where the receiver knows the details of the transaction …Western Union will pay.”
Spratt said he and other police officers and agencies are calling for government regulation of money transfer companies, so courts could levy fines when scams are allowed to happen.
“We’d like to see strict requirements about ID, about reporting suspicious transactions. And we’d like to see some more onus on the money transfer service businesses when it comes to what they do with suspicious transactions or suspicious activity.”
In the meantime, Singh said his bank, BMO, has sent his account to collections, because he can’t afford to pay his $3,000 overdraft.
Bohnert has been more fortunate. Her TD bank branch reimbursed her for the money she lost to the scammers, as a “one-time goodwill gesture.”
Squamish RCMP are investigating her case, but indicated they don’t have enough evidence to pursue charges.
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