The Federal Trade Commission (FTC) sued Walmart for allowing fraudsters to use its money transfer services, thereby depriving consumers of hundreds of millions of dollars.
The The FTC alleges that for years, the company ignored it while fraudsters took advantage of its inability to adequately secure money transfer services offered at Walmart stores.
The lawsuit alleges that the company did not adequately train its employees, did not warn customers, and used procedures that allowed fraudsters to charge in its stores.
The FTC is asking the court to order Walmart to repay consumers and impose civil penalties for the store chain’s violations.
“While fraudsters used their money transfer services to earn cash, Walmart looked elsewhere 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 allowing fraudsters to rip off their 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 Union, and 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used by scammers in a wide variety of scams because they are almost impossible to recover once the money has been withdrawn.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 that 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, scams sweepstakes and others.
According to the information in the 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 subject to of fraud complaints, and also possibly more than $1.3 billion in fraud-related payments.
The investigation 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 this, the company’s money transfer services harmed consumers in many ways, including:
– Allowing the payment of suspicious transfers
– Not having an anti-fraud policy or an ineffective and poorly applied policy
– Allow cash withdrawals for large payments
– Fail to provide materials to prevent consumers from sending fraudulent payments
– Fail to train or effectively retrain staff
– Allowing 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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