FTC sues Walmart over money transfer fraud

The Federal Trade Commission has filed a lawsuit against Walmart on Tuesday accusing the retail giant of looking the other way while scammers hijacked its money transfer business, costing consumers hundreds of millions in losses.

Federal regulators allege Walmart failed to monitor its money transfers services at its stores, which allowed fraudsters to wire money and convert it into cash, serving as a powerful tool in ripping off scam victims.

While scammers used its money transfer services to make off with cash, Walmart looked the other way and pocketed millions in fees, Samuel Levine, director of the FTC's Bureau of Consumer Protection, said in a statement. The commission is holding Walmart accountable for letting fraudsters fleece customers, and consumers have lost hundreds of millions of dollars. The FTC asked the court in its suit to order Walmart to return money taken from consumers and impose civil penalties.

Walmart WMT said in a statement that it would fight it aggressively in court and called the action a factually flawed and legally baseless civil lawsuit.

Walmart provides a number of financial services to customers in its stores, including money transfers, credit cards, reloadable debit cards, check cashing and bill payment. It is also an agent for other money transfer services, such as MoneyGram and Western Union.

Hundreds of millions of dollars are sent each year through Walmart stores, according to the FTC's suit.

The FTC said that services are often used by scam artists because it is very hard to recover money once it has been picked up at the other end of a transfer.

Between 2013 and 2018 more than $197 million in payments were sent or received at Walmart, according to the agency.

The complaint lists a number of cases where scammers have used Walmart money transfers as their primary way to receive payments, such as IRS impersonation schemes, relative-in-need grandparent scams and sweepstakes scams.

Investigators say Walmart did not train its employees to look out for fraud, and for years told them to process a payment even if they believed it was suspicious. The complaint said if you suspect fraud, complete the transaction, a Walmart reference manual was quoted as saying.

The FTC said that stores were attractive to scammers because they didn't have any kind of anti-fraud policy and routinely allowed for large cash payouts with few questions asked.