FTC Sues Walmart for Helping Scammers with Money Transfer Services

The Federal Trade Commission (FTC) said Tuesday that it sued Walmart for allowing its money transfer services to be used by fraudsters, who fleeced consumers out of hundreds of millions of dollars. The FTC has also filed similar cases against other money transfer services such as MoneyGram and Western Union in recent years.

The FTC says that for years, Walmart looked the other way while scammers took advantage of its failure to properly secure the money transfer services offered at its locations. “The company did not properly train its employees, failed to warn customers, and used procedures that allowed fraudsters to cash out at its stores,” according to the FTC’s complaint. The FTC is asking the U.S. District Court for the Northern District of Illinois to order Walmart to return money to consumers and impose civil penalties for the violations.

“While scammers used its money transfer services to make off with cash, Walmart looked the other way 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 letting fraudsters fleece its customers.”

Walmart acts as an agent for multiple money transfer services, including MoneyGram, Ria and Western Union, offering some services under its own brand, like “Walmart2Walmart” and “Walmart2World.” According to the complaint, tens of millions of money transfers are sent or received at Walmart stores each year, where they are processed by Walmart employees.

The FTC complaint cites numerous instances in which law enforcement investigations found that scammers relied on Walmart money transfers as a primary way to receive payments, including in telemarketing schemes like IRS impersonation schemes, relative-in-need “grandparent” scams, sweepstakes scams, and others. 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.

Walmart denies the allegations. It says that the “civil lawsuit is factually misguided and legally flawed”. Walmart said is its own statement that the suit was “approved by the FTC by the narrowest of margins after Chair Lina Khan refused Walmart the due process of hearing directly from the company, and then the Department of Justice refused to take this case to court.” The company says it only serves as an “agent” of other companies that actually transmit the money from one location to the other.