Why can we cancel cheques, but not Western Union transfers?

Question

I saw this thread: What should I do if I lost money in a scam? and one of the comments remarked it may be a double-con, where the real scammer has talked one victim into opening a bank account to receive money from other victims, and then use Western Union to transfer money back to the scammer.

The use of Western Union for advance-fee fraud, and fraud in general, is well-established - and people maintain that once Western Union has sent the money it's gone for good.

I've never been happy with that answer.

In the US, the cheque and ACH system is such that money can be recalled seemingly at any point. The system does not have a "positive acknowledgement" of money transfer, only failure messaging (which is why banks can't tell you for certain if a cheque has cleared or not - only if it bounced, but 95% of cheques bounce within 3-5 business days, so banks often assume money is "safe"/cleared by then). Cheques and ACH transfers can also bounce in a cascading manner even if they earlier passed okay, for example, if you (Bob) send a cheque to Charlie using money you deposited from a cheque from Alice that subsequently bounced - then the cheque to Charlie would also bounce.

Once you send money to Western Union as cash, it's still there in their cash register after it's "sent" - Western Union doesn't have a teleportation machine, they just voluntarily "release" money they already have at the recipient's end at whatever the current exchange rate is. I understand it's the same when giving Western Union money electronically - they have their own messaging system that's independent of SWIFT and other interbank networks, so if you send USD to Nigeria, that USD is still sitting in Western Union's bank account.

Surely if money could be recalled from Western Union in the event of fraud, then Western Union would certainly take more proactive measures against fraudulent use of their service - as it is, I understand they're actually profiting from fraudulent use as they collect their transaction fees regardless.

For comparison, I understand why cryptocurrency amounts cannot be recovered because blockchain systems are based on an immutable, irrevocable distributed ledger - which is what puts trust, and hence value, in the system, - but ACH and Western Union are not, so there is no technical reason money cannot be extracted from Western Union.

Answer 1

You are presuming that after the transfer, the cash is still "sitting in a Western Union register" but no, that cash may have already been taken by the fraudster. To refund the victim, Western Union would have to (1) pay the victim back the amount of money lost, and then (2) pursue the fraudster to reclaim the lost funds.

Because the fraudster at the other end can simply show ID to get the money [ie: they do not have an account with Western Union], the cost to pursue that person to reclaim the lost funds would be substantially higher than for your bank, because your bank can simply ding your account. In the event that your account goes into overdraft [because there were insufficient funds to reclaim the full amount], the bank at least has a framework in place to pursue you for penalties.

Answer 2

When you send money with Western Union, it is essentially a cash transaction. You supply Western Union with the name of the recipient and a location. Your recipient then shows up at a Western Union office, shows some identification, and receives cash. At this point, the transaction is over. It is impossible to retract it at this point, because Western Union has already handed out cash, and they have no way of contacting the recipient any longer.

This is the reason why you might want to legitimately use Western Union. It is an instant way to send cash to anyone anywhere in the world. Let's say that your best friend is stuck in a foreign land and desperately needs money. You can give him cash just as fast as each of you can get to a Western Union office, and you don't even need a local bank account to do so.

Unfortunately, however, the nature of the service also makes it useful for scammers. You should never use this service to pay for something from someone you don't know, because there are absolutely no safeguards.

As mentioned by user662852 in the comments, you can indeed cancel a Western Union money transfer if you do so before the money is picked up by the recipient. But after they pick it up, the cash is gone.