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‘Looked the Other Way, Pocketed Millions in Fees’: FTC Says Walmart Let Criminals Use Money Transfers for $197 Million In Scams, Retailer Should Repay Victims

The Federal Trade Commission is suing the country’s largest retailer Walmart for letting criminals use its money transfer services to scam consumers out of hundreds of millions of dollars. The agency filed a lawsuit on June 29.

The FTC also said that while the retail giant ignored the criminal activity happening on its watch, it still collected fees on the transactions.

Photo: Walmert

Scammers took advantage of Walmart’s failure to properly secure the money transfer services offered at the company’s stores, the agency said in announcing the suit. The company failed on various counts, the FTC claimed: Walmart did not adequately train its employees on how to process money transfers, failed to warn customers when they were alerted to the scam activity and used procedures that allowed the scammers to cash out at its stores, according to the complaint.

“While scammers used its money transfer services to make off with cash, Walmart looked the other way and pocketed millions in fees,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Consumers have lost hundreds of millions, and the commission is holding Walmart accountable for letting fraudsters fleece its customers.”

The amount scammers actually got away with was in the millions. From 2013 to 2018, more than $197 million in payments that were the subject of fraud complaints were sent or received at Walmart. There were more than $1.3 billion in related payments possibly connected to the fraud, said the FTC, citing data from MoneyGram, Western Union and Ria.  

Now the FTC wants the court to order Walmart to return money to consumers and to impose civil penalties for the violations, CBS News reported.

Money transfers can be done at most Walmart stores with the company acting as an agent for services, including MoneyGram, Ria and Western Union. Through money transfers people can send money to other people in different locations. But criminals are often attracted to the services because they are nearly impossible to trace once the cash has been picked up, according to the FTC.

The FTC laid out the various failures of Walmart in the lawsuit. According to the FTC press release. They include:

  • Allowing the payout of suspicious transfers: It was not until May 2017 that Walmart began training employees to deny fraudulent payouts.
  • Not having an anti-fraud policy or an ineffective, poorly enforced policy: Walmart did not have a written anti-fraud or consumer protection program until November 2014.
  • Permitting cash pickups for large payments: Walmart, unlike money transfers outlets, paid out large payments in cash.
  • Scammers were able to retrieve their payments from Walmart by using fake IDs.
  • Not warning consumers about potential frauds: Walmart failed to display or provide required materials to consumers at many of its locations that could have alerted them about potential frauds and stopped them from sending money to scammers.
  • Allowing money transfers to be used for telemarketing purchases: This goes against the FTC’s Telemarketing Sales Rule, which has been in place since 2016, and prohibits money transfers from being used to pay for telemarketing purchases. These types of transactions tend to be fraught with fraud.

Walmart called the FTC suit “factually misguided and legally flawed,” CBS News reported.

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