(CN) - Western Union holds unclaimed money for years without notifying senders that the intended recipients never got the money, and even "brags" to investors that its policy gives it access to more than $100 million in ready cash, a class action claims in Denver Federal Court.
"Western Union brags about this unfair and deceptive business practice in its financial statements, telling investors it always has access to more than $100 million in cash from these unremitted funds that is essentially better than an interest-free loan because Western Union gets to both make use of the money and then ultimately, after using the money for years, charge the customer a fee to return the money instead of paying the customer interest," the complaint states.
The class claims that Western Union keeps the unclaimed money until abandoned-property laws require it to give the money back - in some cases not for 6 years. Meanwhile, Western Union "makes use" of the money, says lead plaintiff Robert Smet.
Smet says he found out about the policy in 2004 after he tried to send $100 to a child in Vietnam to pay for hospital expenses.
Western Union refused to give the money to the child because she was a minor, but did not tell Smet until 2010 that the transaction had not gone through and it still had his money, Smet says.
"The letter was entirely silent as to why Western Union was only now, six years later, reaching out to plaintiff when it had been in possession of plaintiff's contact information the entire time that it had been holding and making use of his money," according to the complaint.
Smet says that asked for his $100 back, Western Union had the brass to send him just $40, saying it was keeping $60 for the "administrative" cost of holding the money all those years.
But Smet says a company official acknowledged that holding his money "had not caused Western Union any hardship and that Western Union could have easily notified him at any time that it still had his money."
In its own defense, Smet says, the company told him that "Western Union was in the business of making money."
He cites Western Union's "Form l0-K for the period ending December 31, 2007," which refers to unredeemed funds as "settlement assets" that "are not used to support [Western Union] operations" but rather to "earn income" for the company.
"Western Union brags about this unfair and deceptive business practice in its financial statements, telling investors it always has access to more than $100 million in cash from these unremitted funds," Smet says. He adds that the company reported it had $203.5 million of such "settlement assets" on hand in 2007, and $348.8 million in 2006.
Smet seeks class damages for violations of various state consumer laws, conversion and unjust enrichment. He also seeks declaratory relief barring the company from holding unredeemed money for longer than 60 days.
The class is represented by Seth Katz with Eldrege Hersh of Englewood, Colo.
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