Walmart Lawsuit: Retail Giant Hits Back At FTC’s Fraudulent Money Transfer Suit

Walmart (WMT) has been sued by the Federal Trade Commission (FTC) for allegedly allowing millions of dollars in fraudulent money transfer services, but the retail giant has slammed the suit, claiming it is “unfounded” and “ignores the billions” it has saved customers.

In its suit, the FTC claims that Walmart turned a blind eye for years while scammers took advantage of its money transfer services, costing consumers money. The agency said that Walmart didn’t train its employees properly, failed to warn consumers, and used procedures that allowed fraudsters to cash out at its stores.

The FTC contends that Walmart allowed wire transfer scams that include “telemarketing schemes like IRS impersonation schemes, relative-in-need 'grandparent' scams, sweepstakes scams, and others.” The agency also claims that Walmart knew that its wire transfer services were involved in scams and fraud.

As reported by the FTC, "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."

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

According to a statement posted by Walmart, the company has saved consumers “$6 billion in fees” through flat, low-fee money transfers while bringing competition to the market for the services.

Walmart says it does employ an anti-fraud program that has stopped hundreds of millions of dollars in fraudulent transactions, with only a “miniscule” number of transactions actually getting through its system.

Walmart claims that the FTC lawsuit is “factually misguided and legally flawed” and holds it responsible for the wrongdoings of third-party fraudsters, despite efforts to stop these criminals.

The company said it will defend the suit “aggressively” as its money transfer services are too important to consumers to be threatened by the agency. Walmart also said it will continue its practices with its money transfer services as it fights to prevent third-party fraud.

The FTC is looking for Walmart to return money to consumers and wants to impose civil penalties for the alleged violations that the retailer has made.

As of Wednesday premarket hours, shares of Walmart were trading at $122.33, down 4 cents or 0.03%.