FTC Lawsuit Claims Walmart Ignored Wire Transfer Fraud, Enabled Scams

In a recently filed federal lawsuit, the Federal Trade Commission (FTC) claims Walmart employees were taught to “turn a blind eye” when the store’s money transfer services were used for fraud—and in some cases, store workers were in on the scams.

According to the lawsuit, at one point, Walmart’s written policy even stated, “If you suspect fraud, complete the transaction.”

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More than 100 Walmart stores between 2015 and 2019 processed more than $100,000 each in fraudulent transactions. At some locations, the FTC claims fraudulent transactions accounted for more than half of that store’s transfer activity. “Walmart has provided an essential service to fraudulent telemarketers, sellers, and con artists,” the lawsuit goes on.

“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.”

Allegedly, Walmart’s role in enabling fraud has been massive. The lawsuit claims that Walmart processed $200 million in known fraud and more than $1.3 billion in suspected fraud between 2013 and 2018.

“Historically, Walmart has been responsible for more complaints about fraud-induced money transfers than any other agent worldwide,” the lawsuit says. “For example, for MoneyGram, between January 1, 2013 and December 31, 2018, Walmart was responsible for approximately 56 percent of all complaints about fraud-induced money transfers through MoneyGram worldwide.”

According to the lawsuit, Walmart’s high employee turnover rate is partly to blame because it makes it very difficult to maintain staff training levels. Approximately 60,000 Walmart employees handle more than a billion transactions annually (an average of well over 16,000 transactions per employee), and some of these employees have been known to be sloppy. For instance, workers will often share login and password information for money transfer systems, which is of course prohibited.

Walmart, for its part, denies the claim that there are flaws in its fraud-fighting system.

“Walmart will defend the company’s robust anti-fraud efforts that have helped protect countless consumers, all while Walmart has driven down prices and saved consumers an estimated $6 billion in money transfer fees,” it said.

The lawsuit seeks an injunction to force Walmart to implement changes as well as restitution for consumers.