Financial Crime: ‘If you suspect fraud, complete the transaction’: FTC accuses Walmart of allowing fraudsters to hijack its money transfer business

The Federal Trade Commission filed a lawsuit against Walmart on Tuesday, accusing the retail giant of looking the other way while scammers hijacked its money transfer business, costing consumers hundreds of millions in losses.

Federal regulators allege in the suit filed in federal court in Illinois that Walmart failed to monitor its money transfers services at its stores, allowing fraudsters to use them to quickly and easily wire money around and convert it to cash, serving as a powerful tool in ripping off scam victims.

“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 FTC asked the court in its suit to order Walmart to return money that had been taken from consumers and impose civil penalties.

In a statement, Walmart

called the action a “factually flawed and legally baseless civil lawsuit,” and said it would fight it aggressively in court.

Walmart offers a number of financial services to customers in its stores, including money transfers, credit cards, reloadable debit cards, check cashing and bill payment. It also serves as an agent for other money transfer services, such as MoneyGram and Western Union.

According to the FTC’s suit, tens of millions of dollars are sent through Walmart stores each year.

But the services are often used by scam artists because it is very hard to recover money once it has been picked up at the other end of a transfer, the FTC said. 

Between 2013 to 2018, more than $197 million in payments that were connected to frauds were sent or received at Walmart, the agency alleged.

The complaint listed numerous examples of cases where scammers involved in everything from  IRS impersonation schemes, relative-in-need “grandparent” scams, to sweepstakes scams, used Walmart money transfers as their primary way to receive payments.  

Investigators say Walmart failed to properly train its employees to look out for fraud, and for years instructed them to process a payment even if they believed it was suspicious. “If you suspect fraud, complete the transaction,” the complaint quoted a Walmart reference manual as saying.  

The company also lacked any kind of anti-fraud policy and routinely allowed for large cash payouts with few questions asked, which made the stores attractive to scammers, the FTC said.

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