The Federal Trade Commission (FTC) announced a lawsuit against Walmart for allegedly facilitating money transfer fraud through its money transfer service partnerships.
In its lawsuit, the FTC alleges 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.
According to the FTC complaint, the company did not properly train its employees, failed to warn customers and employed procedures that allowed fraudsters to cash out at its stores.
“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.”
Walmart acts as an agent for multiple money transfer services, including MoneyGram, Ria and Western Union, as well as offering services under its own brands, 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.
The FTC and Consumer Financial Protection Bureau (CFPB) have brought multiple cases against money transfer services in recent years, including against MoneyGram and Western Union, alleging they failed to protect consumers who used their services.
The FTC’s complaint cites a Walmart internal reference guide for employees which stated: “if you suspect fraud, complete the transaction.”
Walmart asserted that the FTC lawsuit was “misguided.” According to the company, Walmart’s money transfer services help unbanked and underbanked consumers, and its “robust” anti-fraud program helps to stop third-party criminals who try to use the money transfer services to commit fraud.
“Despite Walmart’s anti-fraud programs, the FTC is trying to blame the company for actions by third parties, including fraud the FTC has already acknowledged was caused by another company—while that company was under federal government oversight through a compliance monitor, and during a period when that company’s own fraud prevention system had failed.”