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Lawsuit launched against Walmart over $197 million fraud allegations

By Nithya Bose in Business News, posted June 29, 2022

Walmart faces court action over allegedly allowing fraudsters to exploit its money transfer services to defraud consumers out of millions of dollars.

The Federal Trade Commission (FTC) claims from 2013 to 2018, Walmart received or sent close to $197 million in payments that were the subject of fraud complaints.

However, Walmart calls it a "factually flawed and legally baseless civil lawsuit," and that the agency denied the retailer "the due process of hearing directly from the company."

The suit claims Walmart "turned a blind eye" while fraudsters looted "hundreds of millions of dollars" using typical scams.

They impersonated Internal Revenue Service agents or pretended to be relatives in need of aid before convincing them to send money using Walmart's transfer services.

Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, said: “While scammers used its money transfer services to make off with cash, Walmart looked the other way and pocketed millions in fees.”

The suit claims its money transfer business grew, and the firm failed to implement anti-fraud regulations for many years.

Even after rules were introduced, employees had inadequate training in how to detect fraud and, in some cases, were involved in the scams, collecting financial tips from fraudsters in exchange for assisting the crime.

A spokesperson said: “Walmart will defend the company’s robust anti-fraud efforts that have helped protect countless consumers.”

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The firm also censured the FTC for bringing the complaint against it despite the fact that the agency had already taken action against one of the third-party companies in charge of the money transactions.

It said the agency was attempting to transfer blame for one third-party company's oversight failings while it was under federal supervision.

Customers may transfer money through the retail giant's enormous store network in the United States, Mexico, and the United Kingdom.

The cash may be picked up inside the stores and is frequently utilized by those who do not have bank accounts, and the firm collects millions of dollars as charges for the transfers.

The FTC alleges Walmart was an appealing spot for potential scammers since they could pick up the cash while typically using a phony ID.

Source: The New York Times

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