FTC sues Walmart, saying security lapses led to money-transfer scams
The Federal Trade Commission is suing Walmart, alleging the company should have done more to keep scammers from using its money-transfer services to carry out schemes that cost consumers tens of millions of dollars.
The retail giant dismissed the lawsuit as “factually flawed and legally baseless.”
In the complaint filed Tuesday, the FTC said Walmart failed to secure the money-transfer services or intervene in scammer activities. “The company did not properly train its employees, failed to warn customers, and used procedures that allowed fraudsters to cash out at its stores,” the commission said in a news release.
Walmart offers domestic and international moneytransfer services in its stores through such services as MoneyGram, Ria and Western Union.
According to the FTC, scams involved soliciting money from customers under the guise of selling products in phone calls or prevalent schemes such as impersonating an IRS agent. From 2013-2018, data from Walmart’s partners showed fraudulent transfers sent or received at company stores totaled more than $197 million, with upward of $1.3 billion possibly connected to such schemes.
The FTC said Walmart told its employees to “complete the transactions” even when fraud was suspected. Scam artists, the agency said, can pick up large cash payments at Walmart with a fake ID. The agency also called Walmart’s anti-fraud policy “poorly enforced.”
Walmart includes fraud alerts on its website, which includes possible scams such as impersonation calls and self-protection resources. A 2017 flier also warned customers to never send money to strangers.
“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 said in a statement released Tuesday. The retailer said that it had a “robust anti-fraud efforts” that protected customers while reducing $6 billion in service fees.
A few years ago, the FTC sued MoneyGram and Western Union, two of Walmart’s money-transfer partners. Both companies reached settlements with the FTC to give refunds to customers.