The Federal Trade Commission announced on Tuesday that it sued Walmart, as they accused the retail giant of allowing fraudsters to use its money transfer services and scam customers out of hundreds of millions of dollars.
"In its lawsuit, the FTC alleges that for years, the company turned a blind eye while scammers took advantage of its failure to properly secure the money transfer services offered at Walmart stores," the FTC said.
The FTC claimed that Walmart didn't properly train employees or warn customers of the potential scams, as fraudsters were able to "cash out at its stores."
"The FTC is asking the court to order Walmart to return money to consumers and to impose civil penalties for Walmart’s violations," the FTC said.
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, provided a statement in the news release and said that Walmart made millions by allowing the fraudsters to operate their scam.
"While scammers used its money transfer services to make off with cash, Walmart looked the other way and pocketed millions in fees," Levine said. "Consumers have lost hundreds of millions, and the Commission is holding Walmart accountable for letting fraudsters fleece its customers."
Walmart failed to place anti-fraud policies for years while their money transfer business grew, the FTC said in its lawsuit, according to The New York Times.
"In addition to its retail business, Walmart offers financial services to consumers in its stores, including money transfers, credit cards, reloadable debit cards, check cashing, bill payments and more," the FTC said. "Walmart acts as an agent for multiple money transfer services, including MoneyGram, Ria and Western Union, offering some services under its own brand, like 'Walmart2Walmart' and 'Walmart2World.'"
"From 2013 to 2018 more than $197 million in payments that were the subject of fraud complaints were sent or received at Walmart, with more than $1.3 billion in related payments also possibly connected to the fraud," the FTC added.
The FTC went on to list the ways that Walmart's money transfer services hurt customers. First, Walmart allowed "the payout of suspicious transfers" and in it's guide for employees said, "If you suspect fraud, complete the transaction." Walmart allegedly did not being to train employees how to deny a fraudulent payout until around May of 2017, although, the number of locations it trained employees was limited.
Other complaints against Walmart included, "having no anti-fraud policy or an ineffective, poorly enforced policy," "allowing cash pickups for large payments," "not providing materials to prevent consumers from sending fraudulent payments," "failing to effectively train or retrain staff," and lastly, "allowing money transfers to be used for telemarketing purchases."
The decision to due Walmart was determined by the FTC's 3-2 vote.
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