When it comes to big headlines about multimillion dollar settlements with the US government over alleged fraud, tread carefully. The latest circling the rounds is a $586 million settlement between Western Union and the Federal Trade Commission over a mix of actual fraud where someone is lied to and actually stolen from, and contrived fraud where two people are trying to consensually transfer money to complete a transaction that the government doesn’t like for regulatory reasons. It’s very hard to tell what the big $586 million price tag comes down to, but what is easier to tell is that this settlement will benefit bitcoin and other cryptocurrencies in the end.
Undoubtedly there does seem to be some amount of real fraud involved in this settlement. The old Nigerian scam where the prince of Nigeria promises you millions of dollars if you can pay for his plane ticket, send it Western Union. Or a fake telemarketer calls you, sells you something, demands money via Western Union and then never sends you anything. Or someone pretends to be a family member stranded in Yemen and asks for money so they can leave the Yemeni airport and escape the incoming terrorists.
These are actual crimes by any moral standard. But other things stand out in this settlement that are only artificially criminal, like hundreds of millions of dollars to human traffickers in China and drug traffickers globally. While the term “human trafficking” certainly sounds bad and nothing any of us want to be a part of, it usually involves a consensual agreement to move people illicitly across international borders. (That is, if we’re not talking about being kidnapped into forced sex slavery, which of course is a real and horrible crime.) Drug trafficking is just the movement of goods that the government doesn’t like, across borders. If vitamin C were classified as a Schedule I drug tomorrow by Congress, shipping oranges internationally would be considered drug trafficking. That doesn’t mean it’s an actual crime.
Even assuming that everything involved in this settlement is bona fide fraud, the question that must be asked is why should stopping such fraud be Western Union’s responsibility? If I wire money via any bank to any other bank to pay for a telemarketing product, can I sue either bank if I never get the product? If I fall for a Nigerian scam but pay by wire, is the bank responsible? Why should it be, assuming it doesn’t freely choose to accept responsibility for someone else’s stupidity?