Walmart sued by FTC for large-scale money transfer fraud

The FTC sued Walmart, saying it turned a blind eye to fraudsters using its money transfer services to defraud “hundreds of millions of dollars”.

In a trial [PDF] filed on Tuesday, the US regulator claimed the hypermarket giant is “well aware” of telemarketing fraudsters and other scammers who convince victims to part with their hard-earned money through its services, with the money funneled to national and international criminal networks.

Walmart is accused of allowing these fraudulent money transfers to continue, failing to warn people to be on their guard and failing to adopt policies and train employees on how to prevent these types of fuss .

The FTC wants the courts to order Walmart to return the money to the victims and compel the company to spit out penalties for, in the regulator’s view, violating the FTC Act and the Telemarketing and Fraud Prevention Act and consumer abuse.

“As scammers used its money transfer services to make money, Walmart looked the other way and pocketed millions in fees,” said Samuel Levine, director of the FTC’s Consumer Protection Bureau. . “Consumers lost hundreds of millions, and the Commission holds Walmart responsible for letting fraudsters defraud its customers.”

Walmart, unsurprisingly, has a different version of events.

“This lawsuit is factually and legally wrong and Walmart will aggressively defend against it,” a spokesperson said. The register.

“Claiming an unprecedented extension of the FTC’s authority, the agency seeks to blame Walmart for fraud that the agency previously attributed to another company while that company was under the direct supervision of the federal government,” it said. the company added in a statement.

“Walmart will champion the company’s strong anti-fraud efforts that have helped protect countless consumers, while lowering prices and saving consumers approximately $6 billion in money transfer fees.” , he continued.

That other company mentioned in Walmart’s statement is presumably MoneyGram or Western Union, both of which settled with the FTC for hundreds of millions of dollars after the agency took them to court on similar charges.

Walmart also offers money transfer services through MoneyGram and Western Union at its locations in the United States and Mexico.

Last year, MoneyGram agreed to pay $125 million to reimburse consumers and settle a 2009 case with the FTC. And in 2017, Western Union agreed to forfeit $586 million after the FTC and Justice Department sued it for money laundering and consumer fraud.

In addition to its retail business, Walmart offers financial services in its stores. These include, among others, money transfers, and Walmart acts as an agent for these services through companies such as MoneyGram, Western Union and Ria, in addition to offering certain services under its own brands: Walmart2Walmart and Walmart2World.

From 2013 to 2018, MoneyGram, Ria and Western Union received at least 226,679 complaints about fraudulent money transfers sent or received at a Walmart store, according to this latest lawsuit, which cites information in the three services’ databases. of transfer. These complaints totaled more than $197 million, according to the FTC, with the average loss from individual consumer fraud amounting to about $870.

However, “these complaints represent only a small percentage of the actual fraud perpetrated through money transfers sent or received at Walmart stores,” according to the lawsuit, which added, “Historically, Walmart has been responsible for more complaints about fraudulent money transfers than any other agent in the world.”

Additionally, Walmart charges a fee to send a money transfer. The lawsuit alleges that “Walmart has earned millions of dollars from these charges to date.” ®

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