In its original complaint, filed in June 2022, the Federal Trade Commission accused Walmart of allowing scammers and other criminals to use wire services—including those offered by MoneyGram, Western Union, and Ria—to defraud American consumers out of hundreds of millions of dollars.
Walmart has agreed to pay $10 million to settle a Federal Trade Commission lawsuit alleging that the company facilitated wire fraud by ignoring warning signs that criminals were using the service to scam customers out of hundreds of millions of dollars.
According to NBC News, the settlement agreement was filed in a Chicago-based federal court earlier this week, though it still requires approval by U.S. District Judge Manish Shah before it can be finalized.
Aside from making a $10 million payment, Walmart also said that it will no longer process money transfers that it suspects could be fraudulent. Furthermore, the company will no longer provide any assistance to sellers or telemarketers it believes could be committing wire fraud.
“Electronic money transfers are one of the most common ways that scammers tell consumers to send them money, because once it’s sent, it’s gone for good,” said Christopher Mufarrige, the director of the FTC’s consumer protection bureau. “Companies that provide these services must train their employees to comply with the law and work to protect consumers.”
The terms of the settlement did not involve Walmart admitting fault or wrongdoing.
In its original complaint, filed in June 2022, the Federal Trade Commission accused Walmart of allowing scammers and other criminals to use wire services—including those offered by MoneyGram, Western Union, and Ria—to defraud American consumers out of hundreds of millions of dollars.
“Money transfers are a common vehicle for fraud. Walmart offers money transfers through its stores, and for many years, consumers have reported tens of millions of dollars annually in fraud-induced money transfers processed by Walmart employees,” the June 2022 lawsuit claimed. “These practices have harmed many consumers, including people struggling with debt, those threatened by imposters, and older Americans.”
Walmart, the FTC said, broadly failed to implement effective anti-fraud policies and did not provide adequate training to employees.
“Walmart is well aware that telemarketing and other mass marketing frauds, such as ‘grandparent’ scams, lottery scams, government agent impersonator scams, induce people to use Walmart’s money transfer services to send money to domestic and international fraud rings,” the complaint said. “Nevertheless, Walmart continued processing fraud-induced money transfers at its stores—funding telemarketing and other scams—without adopting policies and practices that effectively detect and prevent these transfers. In some cases, Walmart’s practices have even made it easier for fraudsters to collect fraud-induced money transfers at a Walmart store.”
The Federal Trade Commission claimed that, even as regulations changed, Walmart still clung to and enforced policies that were typically more friendly to criminals than to unsuspecting consumers.
“For example,” the lawsuit says, “for years, it was Walmart’s policy or practice not to deny payouts to suspected fraudsters at its stores, but instead to have its employees complete those transactions. Even after it became illegal in June 2016 for cash-to-cash money transfers to be used for telemarketing transactions, Walmart failed to take appropriate steps to prevent those types of transfers at its locations.”
The settlement agreement was approved by the Federal Trade Commission in a 3-0 vote.
Sources
FTC sues Walmart for facilitating fraud, costing consumers ‘hundreds of millions of dollars’
Walmart to Pay $10 Million to Settle FTC Allegations it Allowed Scammers to Obtain Millions from Consumers Using Company’s Wire Transfer Services
Walmart to pay $10 million to settle lawsuit over money transfer fraud
