FTC Takes Walmart to Court Over Money Transfer Fraud Allegations

The Federal Trade Commission has sued Walmart alleging that its money transfer services were corrupted by fraudsters — which reportedly resulted in customers being “fleeced out of hundreds of millions of dollars,” according to a Tuesday (June 28) press release from the consumer watchdog.

In its statement, the government agency claims Walmart had “turned a blind eye for years” as scammers took advantage of the retail giant’s lack of security for money transfer services.

The FTC also alleges that Walmart didn’t properly train its employees, or warn customers about the risks. It also reportedly used procedures that allowed fraudsters to cash out at its stores.

“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 responded with a corporate statement that said the FTC was “narrowly divided” and that the civil suit was “factually flawed and legally baseless.” The company said the chair had refused Walmart due process of hearing directly from the company.

Walmart said the FTC’s authority was now being expanded in an “unprecedented” way, and added that the fraud happening was “already attributed to another company while that company was under the federal government’s direct supervision.”

In April, PYMNTS wrote that Walmart’s technology has helped it to freeze “millions” of dollars in gift cards purchased by elderly scam victims.

Read more: Walmart Stops $4M in Gift Cards From Reaching Scammers Targeting Older Victims

The U.S. Department of Justice had seized the funds after the company notified the agency, and it will help the victims get their money back.

Walmart’s savings on this matter amount to just a fraction of the millions lost every year in the “impostor” scams that involve gift card purchases, with the amount of money taken in those scams surging in the last few years.