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Leato v. Western Union Holdings, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

March 5, 2019




         John and Laurina Leato have filed this lawsuit under the diversity of citizenship statute, 28 U.S.C. § 1332. They proceed pro se and have sought leave to proceed in forma pauperis ("IFP"). The Plaintiffs have brought this lawsuit against Western Union Holdings, Inc. ("Western Union"). Western Union is incorporated in Delaware and has its principal place of business in Colorado. The case is before the Court for screening pursuant to 28 U.S.C. § 1915(e)(2).

         I. BACKGROUND

         According to the allegations of the Complaint and attachments thereto, the dispute between Plaintiffs and Western Union is over eight "fraud induced" wire transfers from April 12, 2008, until March 26, 2009, totaling $18, 750. All but $500 of this amount was sent to Leonardo Torres in the Republic of Ghana. Plaintiffs do not indicate why they made these wire transfers or who Leonardo Torres is.

         Plaintiffs further allege that Western Union owes it for "two counts" of identity theft. They maintain they were victimized "via exposure to scammers and imposter's found in the Western Union fiasco from March 2008, to March of 2018." Plaintiffs have submitted as part of Exhibit B (Doc. 1-2) a copy of a notice dated June 13, 2016, from the Internal Revenue Service stating that it had verified their documents and marked their account with an identity theft indicator. They have also submitted as part of the same exhibit an identical notice dated July 18, 2016.

         Plaintiffs allege they have been financially destroyed and on October 31, 2017, had to file Chapter 7 bankruptcy. Plaintiffs allege they listed Western Union on their "debtors list of valid claims" for $18, 750 plus damages in the amount of $30, 000, 000. Plaintiffs allege that Western Union has failed to comply with the bankruptcy court order to pay both the amount of their actual loss and $30 million in damages.[1] Plaintiffs contend they have been given the run-around by Western Union with "all other failed class action efforts."

         Plaintiffs allege Western Union has violated the Deceptive Practices Acts of all fifty states; the Illinois Consumer Fraud and Deceptive Business Practices Act ("Consumer Fraud Act"); and the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank").

         Plaintiffs also indicate there is a process to submit a claim for remission from a $586 million settlement between Western Union, the Federal Trade Commission ("FTC"), and the Department of Justice. Plaintiffs have attached a notice from the FTC that states:

[A]ccording to the FTC, Western Union has known for years that scammers were using its system to commit significant fraud, Western Union kept taking people's money. Probably billions in fraud-related transfers, since January 2004. But today, in a global settlement with the FTC and the U.S. Department of Justice, Western Union agreed to return $586 million to people and create a strong anti-fraud program.
So, what kind of evidence was Western Union ignoring? Well, says the FTC, from January 2004 to August 2015, the company got more than 550, 000 complaints about money transfers made for fraudulent lottery and prizes, family emergency calls, advance-fee loans, online dating and more. There were its own internal reports, which flagged fraud by some of its own agents, including many international agents that paid out fraud-induced transfers from U.S. consumers. And there were warnings from U.S. and international law enforcement about the fraud. And yet, the money kept rolling on through.

(Doc. 1-7 at 1).

         A document attached to the Complaint indicates that a "remission process" was set up and a website created, (Doc. 1-6 at 4).

         According to the website information submitted by the Plaintiffs, the remission fund applied to victims of an

international consumer fraud scheme. As part of the scheme, fraudsters contacted victims and falsely posed as family members in need or promised prizes or job opportunities. The fraudsters directed victims to send money through Western Union to help their relative or claim their prize.....If you believe you were a victim of the fraud described above and you made a wire tra[n]sfer through Western Union between January 1, 2004, and January 19, 2017, you may be eligible for remission. In order to be considered for a remission payment, you will be required to submit a Remission Form along with any available supporting documentation. Your petition must be filed ...

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