Court Battles

FTC alleges Walmart let fraudsters use money-transfer services

The Federal Trade Commission (FTC) sued Walmart on Tuesday for allegedly allowing scammers to use its money transfer services and defraud consumers out of hundreds of millions of dollars.

In the lawsuit filed in the U.S. District Court for the Northern District of Illinois, the FTC said Walmart is aware of fraudsters abusing the money transfer system through services like MoneyGram, Ria and Western Union, as well as its own internal services, but said the company for years has looked the other way.

Federal agents accused Walmart of receiving reports of fraud in more than $197 million payments from 2013 to 2018, while $1.3 billion in related payments were also suspicious.

The FTC board voted 3-2 to bring the lawsuit against the corporate giant. Samuel Levine, the director of the Bureau of Consumer Protection, said the agency will hold the retail company accountable “for letting fraudsters fleece its customers.”

“While scammers used its money transfer services to make off with cash, Walmart looked the other way and pocketed millions in fees,” Levine said in a statement.

In a statement published Tuesday, Walmart officials said the lawsuit was “factually flawed and legally baseless” and accused the FTC of refusing to hear the company out in a hearing.

“Claiming an unprecedented expansion of the FTC’s authority, the agency seeks to blame Walmart for fraud that the agency already attributed to another company while that company was under the federal government’s direct supervision,” the statement reads.

The retail company said it will defend itself in court.

Scammers, either domestic or international, often lure consumers into using money transfer services to pay them because the funds can be pulled out anywhere in the world and once taken are nearly impossible to get back.

Fraudsters, who often target vulnerable consumers, including older Americans and those with debt, typically pose as agents from government agencies such as the Social Security Administration or the IRS. Other times, they warn consumers that they’re in trouble or someone they know is.

Last year, the FTC said the agency received more than 2.8 million fraud reports and that American consumers lost more than $5.8 billion from fraudulent schemes, an increase of more than 70 percent from 2020.

Cracking down on financial fraud schemes that hit the everyday consumer has long been a priority for the FTC. MoneyGram, one of the most common money transfer services, was fined $18 million in 2009 by the FTC and another $125 million in 2018 for not complying with the original fine.

The FTC on Tuesday accused Walmart of not sufficiently training staff to stop fraud, failing to implement a rigorous policy on scam prevention, allowing suspicious transfers and cash payments for large pickups and authorizing money transfers for telemarketing services in violation of a 2016 FTC policy.

Agents said they found “numerous instances” that “scammers relied on Walmart money transfers as a primary way to receive payment.”

In its Tuesday statement, Walmart said it employs anti-fraud policies and efforts to protect its customers and has saved American consumers money.

“Walmart will defend the company’s robust anti-fraud efforts that have helped protect countless consumers, all while Walmart has driven down prices and saved consumers an estimated $6 billion in money transfer fees,” the company said.

Tags Federal Trade Commission fraud Fraud Illinois Money transfers Money transfers Walmart Walmart
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