FRC sues Walmart for facilitating money transfer fraud and requests restitution of damages for those affected

The Federal Trade Commission (FTC) sued Walmart for allowing fraudsters to use their money transfer services, thus depriving consumers of hundreds of millions of dollars.

The FTC argues that for years, the company played dumb while fraudsters took advantage of its inability to properly secure money transfer services offered at Walmart stores.

In the lawsuit, it is alleged that the company did not adequately train its employees, did not warn customers, and used procedures that allowed fraudsters to charge at its stores.

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

“While scammers used their money transfer services to earn cash, Walmart looked the other way and pocketed millions in feessaid Samuel Levine, Director of the FTC’s Office of Consumer Protection. “Consumers have lost hundreds of millions, and Commission is holding Walmart accountable for letting scammers fleece its customers”.

In addition to its retail business, Walmart offers financial services to consumers in its stores, including money transfers, credit cards, reloadable debit cards, check cashing, bill payment and more. Walmart acts as an agent for multiple money transfer services, including MoneyGram, Ria, and Western Unionand offers some services under its own brand, such as “Walmart2Walmart” and “Walmart2World”.
According to the complaint, tens of millions of money transfers are sent or received each year at Walmart stores, where they are processed by Walmart employees.

Money transfers are services that people use to send money to a recipient somewhere else. They are frequently used by scammers in a wide variety of scams because they are almost impossible to recover once the money has been withdrawn. The FTC has brought multiple cases against money transfer services in recent years, including MoneyGram and Western Union, alleging they failed to protect consumers who used their services.

The complaint cites numerous cases in which law enforcement investigations found that fraudsters relied on Walmart money transfers as a primary way to receive payments, including in telemarketing schemes such as IRS impersonation schemes, “grandparent” scams with relatives in need, sweepstakes scams and others.

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

The FTC’s investigation into Walmart’s money transfer practices showed, according to the complaint, that Walmart was aware of the role money transfer services play in scams and fraud. Despite that, the company’s money transfer services harmed consumers in many ways, including:

Allow payment of suspicious transfers

Not having an anti-fraud policy or an ineffective and poorly applied policy

Allow cash withdrawals for large payments

Failure to provide materials to prevent consumers from sending fraudulent payments

Failing to train or retrain staff effectively

Allow money transfers to be used for telemarketing purchases

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

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