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The FTC is Suing Walmart For ‘Turning a Blind Eye’ to Fraud Via Its Money Transfer Services

The Federal Trade Commission (FTC) is suing Walmart for “turning a blind eye” to scammers who used the company’s money transfer system to steal from customers.

In a complaint filed Tuesday in a U.S. district court in the Northern District of Illinois, the FTC said Walmart allowed its money transfer services to be used to defraud consumers out of “hundreds of millions of dollars” through telemarketing and other scams and has failed to enact policies to prevent these transfers.

According to the FTC, Walmart knew that various telemarketing scams — which work by deceiving people into wiring money — tend to convince people to send money to fraud rings via Walmart’s money transfer services.

“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,” the lawsuit alleged.

Walmart offers a slew of financial services to customers, including money transfers, credit cards, reloadable debit cards, check cashing and bill payments. The company facilitates payments on money transfer services like MoneyGram, Ria and Western Union as well as through its own programs, such as Walmart2Walmart and Walmart2World.

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In a public statement, Walmart described the lawsuit as “factually flawed and legally baseless” and accused the FTC of placing the blame on Walmart after already blaming MoneyGram, another company that had been under the supervision of the federal government. The FTC had previously discovered that MoneyGram, which works with Walmart on transfers, had a failure in its anti-fraud interdiction system during an 18-month period, according to a FOIA request from Walmart.

“Walmart has a robust anti-fraud program to help stop third-party criminals who try to use money transfer services to commit fraud, and only a miniscule number of transactions are even alleged to be fraudulent,” Walmart said in a statement. “In fact, Walmart has stopped hundreds of thousands of suspicious transactions totaling hundreds of millions of dollars.”

Walmart said it plans to “defend against this lawsuit aggressively.”

This is not Walmart’s first brush with the FTC. In May, the FTC fined Walmart $2.5 million in civil penalties in light of allegations that the retailer misled consumers by falsely marketing some products as bamboo. In November, the FTC ordered Walmart and other retailers to to turn over information that would help explain the Lululemon Workers Look to Unionize D.C. Store, the First Location to Do So.

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