FTC sues Walmart for allegedly allowing money transfer fraud at stores
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BENTONVILLE, Ark. (KNWA/KFTA) — The Federal Trade Commission is suing Walmart, accusing the national retailer of allowing its money transfer services to be used by fraudsters that reportedly took hundreds of millions of dollars from consumers.

In its lawsuit, the FTC alleges the Bentonville-based retailer “turned a blind eye while scammers took advantage of its failure to properly secure the money transfer services offered at Walmart stores” for years. The complaint adds Walmart “did not properly train its employees, failed to warn customers, and used procedures that allowed fraudsters to cash out at its stores.”

The FTC says it is asking the court to order Walmart to return money to consumers and to impose civil penalties for the company’s violations.

“While scammers used its money transfer services to make off with cash, Walmart looked the other way and pocketed millions in fees,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a Tuesday release. “Consumers have lost hundreds of millions, and the Commission is holding Walmart accountable for letting fraudsters fleece its customers.”

Walmart offers shoppers a number of financial services, including money transfers, reloadable debit cards, check cashing, and bill payments. The retailer serves as an agent for money transfer services like Western Union and MoneyGram, both of which FTC has brought multiple cases against for failing to protect consumers. Walmart also has its own services like “Walmart2Walmart” and “Walmart2World.”

The FTC says tens of millions of money transfers are sent or received at Walmart stores each year, where they are processed by Walmart employees. Money transfers allow people to send money to a recipient in another location.

According to the FTC, they are “frequently used by fraudsters across a wide variety of scams” because they are nearly impossible to retrieve after the money has been picked up.

Walmart’s practice of “turning a blind eye to fraud had grave consequences for consumers,” according to the complaint. The FTC’s complaint cites instances in which law enforcement investigations found scammers relied on Walmart money transfers as a primary way to receive payments. This includes telemarketing schemes like IRS impersonation schemes, relative-in-need “grandparent” scams, sweepstakes scams, and others, the FTC explains.

Between 2013 and 2018, more than $197 million in payments related to fraud complaints were sent or received at Walmart stores, fraud databases maintained by MoneyGram, Western Union, and Ria show. More than $1.3 billion in related payments may also be connected to fraud, the FTC says.

The federal agency claims its investigation found Walmart knew the role its money transfer services were playing in scams and frauds.

Walmart Corporate issued a statement in response to the complaint.

A narrowly divided Federal Trade Commission brought this factually flawed and legally baseless civil lawsuit after the Chair refused Walmart the due process of hearing directly from the company, and even the Justice Department refused to take this case to court. 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. 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.

Walmart Corporate statement regarding FTC complaint

The FTC filed the complaint in the U.S. District Court for the Northern District of Illinois.

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