Walmart Allows Scammers Use Money Transfer Services: According to allegations made by the Federal Trade Commission in a lawsuit brought against Walmart on Tuesday, the nation’s largest retailer allowed criminals to use its money transfer services to defraud customers out of hundreds of millions of dollars while charging fees on the transactions.
FTC sues Walmart for facilitating money transfer scams
In announcing the lawsuit, the agency claimed that Walmart had been negligent in failing to adequately secure the money transfer services it provided at its retail locations for years.
According to the FTC’s complaint, the company failed to appropriately train its staff, neglected to notify customers, and employed practices that made it possible for fraudsters to withdraw money from its locations.
According to the legal complaint, previous law enforcement investigations discovered that Walmart money transfers are a typical method for criminals to profit from a variety of telemarketing schemes.
According to the FTC, which used data from MoneyGram, Western Union, and Ria, more than $197 million in payments that were the subject of fraud complaints were issued or received at Walmart between 2013 and 2018, and more than $1.3 billion in related payments may have been linked to the scam.
Walmart is being ordered to restore money to customers, and civil fines for the offenses are also being sought by the FTC.
According to Samuel Levine, director of the FTC’s Bureau of Consumer Protection, “Walmart looked the other way while scammers utilized its money transfer services to make off with cash, and pocketed millions in fees.”
The commission is holding Walmart responsible for allowing fraudsters to defraud its customers, and consumers have lost hundreds of millions as a result.
“Factually misguided” FTC lawsuit According to Walmart
Walmart vowed to contest the FTC’s legal action, with a company representative dubbing the accusations “factually wrong and legally defective.”
According to a statement from the store, the FTC wants to “blame Walmart for fraud that the agency has imputed to another corporation when that company was under the federal government’s direct supervision.”
Walmart’s legal team also submitted a Freedom of Details Act request to the FTC in June, asking for information.
In the FOIA request, lawyer Sean Berkowitz of Latham & Watkins stated that the FTC “appears poised to pursue a novel and untested legal theory against Walmart that would represent an unprecedented expansion of the agency’s power— and will do so based on significant factual errors and to address a significant amount of reported fraud that the agency already publicly attributed to other actors, not Walmart.”
As an agent for companies like MoneyGram, Ria, and Western Union, Walmart provides financial services, including money transfers, in its retail locations.
Additionally, it provides these services under its own brand, such as “Walmart2World” and “Walmart2Walmart.”
According to the FTC, money transfers, which enable users to transmit money to a person who is located elsewhere, are frequently utilized by criminals since they are very impossible to trace once the money has been picked up.
In recent years, the agency has filed numerous lawsuits against payment service providers, including MoneyGram and Western Union, alleging that they failed to protect customers.
Customers are helped by Walmart’s anti-fraud initiatives, and the business claims that its efforts to lower prices have saved them an estimated $6 billion in money transfer fees.