FTC sues Walmart for allegedly allowing fraudulent money transfers

The Federal Trade Commission has filed a lawsuit against Walmart claiming the retailer failed to prevent fraud in connection with money transfers sent and received from its stores.

The FTC said Walmart not only allowed the fraud to continue but also collected fees associated with those fraudulent practices that caused customers to lose “tens of millions of dollars.”

In the complaint, the FTC said, “Money transfers are a common vehicle for fraud. Walmart offers money transfers through its stores, and for many years, consumers have reported tens of millions of dollars annually in fraud- induced money transfers processed by Walmart employees.

“These practices have harmed many consumers, including people struggling with debt, those threatened by impostors and older Americans.

“Walmart is well aware that telemarketing and other mass marketing frauds, such as ‘grandparent’ scams, lottery scams and government agent impersonator scams, induce people to use Walmart’s money transfer services to send money to domestic and international fraud rings.

“Nevertheless, Walmart has continued processing fraud-induced money transfers at its stores — funding telemarketing and other scams — without adopting policies and practices that effectively detect and prevent these transfers.

“In some cases, Walmart’s practices have even made it easier for fraudsters to collect fraud-induced money transfers at a Walmart store.

“For example, for years, it was Walmart’s policy or practice not to deny payouts to suspected fraudsters at its stores but instead to have its employees complete those transactions.

“Even after it became illegal in June 2016 for cashto-cash money transfers to be used to pay for telemarketing transactions, Walmart failed to take appropriate steps to prevent those types of transfers at its locations.

“As a result of Walmart’s failure to take appropriate steps to mitigate the problem, consumers have lost substantial sums to frauds through money transfers effected at Walmart.”

According to The Associated Press, Walmart denies the allegations and said the lawsuit is “factually flawed and legally baseless.”

AP reported that Walmart said, “that the chair of the FTC refused Walmart the due process of hearing directly from the company and said the Justice Department had refused to take the case to court.”

“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,” it said.