Walmart has agreed to pay $10 million to settle allegations from the Federal Trade Commission (FTC) that it allowed scammers to exploit its in-store money transfer services to steal hundreds of millions of dollars from customers.
The FTC’s June 2022 complaint accuses Walmart of allowing its money transfer services to be used by fraudsters between 2013 and 2018. It states that the retailer allowed criminals to exploit services, including MoneyGram, Western Union, and Ria, which Walmart acted as an agent for, to defraud customers of hundreds of millions.
Additionally, Walmart used procedures that let fraudsters cash out at its stores while “Walmart looked the other way and pocketed millions in fees”, claims Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.
On top of its retail businesses, Walmart provides additional financial services to customers at its stores, such as money transfers, credit cards, reloadable debit cards, check cashing, and more. In total, tens of millions of money transfers are sent or received at Walmart stores each year.
The complaint cites various instances where scammers relied on Walmart money transfers as a primary way to receive payments, with over $197 million in payments related to fraud cases sent or received at Walmart from 2013 to 2018. There are over $1.3 billion in related payments also potentially connected to malicious activity.
According to the FTC’s allegations, the company’s money transfer services harmed consumers in numerous ways, such as allowing payouts of suspicious transfers, allowing large money pickups in cash, as well as allowing money transfers to be used for telemarketing purchases.
“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, Director of the FTC’s Bureau of Consumer Protection. “Companies that provide these services must train their employees to comply with the law and work to protect consumers.”
According to the FTC, on top of the $10 million judgment, the stipulated order prohibits Walmart from providing money transfer services without implementing timely fraud prevention techniques and sending or paying out any money transfer that it knows (or consciously avoids knowing) is fraud-induced.
While Walmart didn’t admit any wrongdoing, it claimed to share the FTC’s goal to protect consumers from fraudsters.
"We're pleased to have this matter behind us. While it is clear in the agreement that we do not admit fault, we share in the FTC's goal to protect consumers from fraudsters and continue to be dedicated to safeguarding consumers from fraud-induced money transfers," a Walmart spokesperson said.
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