The Federal Trade Commission (FTC) is suing Walmart for allowing fraudsters to use its money transfer services to take hundreds of millions of dollars from customers in scams. Yikes!
On last Tuesday, June 28, the FTC filed a civil penalty complaint in the U.S. District Court for the Northern District of Illinois, alleging that Walmart has allowed scammers to take advantage of the company’s faulty money transfer services for years.
So, how exactly did these fraudsters take advantage of customers? Walmart’s array of money transfer services, including MoneyGram, Ria, and Western Union, allow people to send money to another party. The catch is that it’s extremely hard to get that money back once the other person has received it. According to the FTC’s complaint, scammers frequently use these services to carry out scams. They use tactics like impersonating the IRS, pretending to be relatives in need of money, offering sweepstake prizes, and more. Once people fall for these schemes and send money through the transfer services, it is nearly impossible to get that money back. As a result, consumers lost more than $197 million dollars between 2013 and 2018, according to fraud databases—and a possible $1.3 billion more may also be connected to these scams.
According to the FTC, law enforcement has linked many of these schemes directly back to Walmart. And it isn’t just that the store’s money transfer services allow for these scams to be carried out; the FTC also alleges that the company has known what was going on for years and has failed to address the issue. Instead, they are “turning a blind eye.”
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said that “Walmart looked the other way and pocketed millions in fees” while fraudsters got cash from their money transfer services. “Consumers have lost hundreds of millions, and the Commission is holding Walmart accountable for letting fraudsters fleece its customers,” he stated.
The FTC says the lost money is the result of several issues Walmart is at fault for, including a lack of proper training, a failure to warn customers, and poor money transfer procedures—including the fact that they allow cash pickups for large payments and allow money transfers to be used for telemarketing purchases, which has been prohibited since 2016. The Commission is now asking that the company reimburses all customers who have lost money due to these violations.
In a recent statement, Walmart Corporate said they 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.”
