US sues Walmart for facilitating money transfer scams worth $197 mn

Washington, June 29

The US Federal Trade Commission (FTC) has sued retail commerce giant Walmart for allegedly allowing its money transfer services to be used by fraudsters, who fleeced consumers out of more than $197 million.

In its lawsuit, the FTC alleged that for years, the company turned a blind eye while scammers took advantage of its failure to properly secure the money transfer services offered at Walmart stores.

"The company did not properly train its employees, failed to warn customers, and used procedures that allowed fraudsters to cash out at its stores", according to the FTC's complaint.

"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.

"Consumers have lost hundreds of millions, and the Commission is holding Walmart accountable for letting fraudsters fleece its customers," he said in a statement late on Tuesday.

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

In media reports, Walmart described the lawsuit as both "factually flawed and legally baseless."

Walmart acts as an agent for multiple money transfer services, including MoneyGram, Ria and Western Union, offering some services under its own brand, like "Walmart2Walmart" and "Walmart2World".

According to the complaint, tens of millions of money transfers are sent or received at Walmart stores each year, where they are processed by Walmart employees.

"Walmart's practice of turning a blind eye to fraud had grave consequences for consumers," according to the complaint.

The complaint cited numerous instances in which law enforcement investigations found that scammers relied on Walmart money transfers as a primary way to receive payments, including in telemarketing schemes like IRS impersonation schemes, relative-in-need "grandparent" scams, sweepstakes scams, and others.

Based on information from fraud databases maintained by MoneyGram, Western Union, and Ria, from 2013 to 2018 more than $197 million in payments that were the subject of fraud complaints were sent or received at Walmart, with more than $1.3 billion in related payments also possibly connected to the fraud.

The FTC has filed the complaint in the US District Court for the Northern District of Illinois.