Walmart Facilitated Scams According To The FTC

By FTC & SCARS Editorial Team

Walmart: FTC Files Amended Complaint Charging that Walmart Facilitated Scams Through Its Money Transfer Services That Fleeced Customers Out of Hundreds of Millions

The Federal Trade Commission filed an amended complaint against Walmart – bolstering the agency’s case that Walmart allowed its money transfer services to be used by scammers, who fleeced consumers out of hundreds of millions of dollars.

The FTC filed the amended complaint in the U.S. District Court for the Northern District of Illinois against Walmart, following the court’s March 27, 2023 ruling on the FTC’s initial complaint. The amended complaint adds further details on Walmart’s alleged violations of the Telemarketing Sales Rule, including the Rule’s ban on the use of cash-to-cash money transfers in any telemarketing transaction.

According to the amended complaint, Walmart for years turned a blind eye while scammers took advantage of its failure to properly secure the money transfer services offered at Walmart stores. Walmart did not properly train its employees, failed to warn customers, and used procedures that allowed scammers to cash out at its stores, according to the FTC’s complaint.

Walmart Money transfers are frequently used by fraudsters across a wide variety of scams because they are nearly impossible to retrieve after the money has been picked up. The amended complaint cites numerous instances in which scammers relied on Walmart money transfers as a primary way to receive payments, including in telemarketing schemes such as sweepstakes scams, advance-fee loan scams, IRS impersonation schemes, relative-in-need “grandparent” scams, and others.

The FTC’s investigation of Walmart’s money transfer practices showed, according to the complaint, that Walmart knew about the role money transfer services play in fraud and telemarketing schemes. Despite that, the company’s money transfer services harmed consumers in numerous ways, including:

• Walmart allowed the payout of transfers with characteristics of fraud;

• Walmart had no anti-fraud policy or an ineffective, poorly enforced policy;
• Allowing cash pickups for large payments;

• Walmart did not provide warnings to prevent consumers from sending payments related to scams;

• Walmart failed to effectively train or retrain staff;

• Walmart allowed money transfers to be used for telemarketing purchases that violate the Telemarketing Sales Rule.

The Commission vote to authorize staff to file the amended complaint in the U.S. District Court for the Northern District of Illinois was 3-0.

SCARS Analysis: Walmart

The Federal Trade Commission’s (FTC) Amended Complaint against Walmart over money transfer scams is significant because it is the first time that the FTC has filed suit against a major retailer for allegedly facilitating fraud through its money transfer services.

• The FTC Walmart complaint alleges that Walmart knew or should have known that its money transfer services were being used by scammers to defraud consumers, but failed to take adequate steps to prevent or stop the fraud.
• The complaint also alleges that Walmart profited from the fraud by charging consumers high fees for its money transfer services. The FTC is seeking monetary damages, injunctive relief, and other remedies to stop Walmart from continuing to facilitate fraud through its money transfer services.
• The complaint is significant because it could have a chilling effect on other retailers that offer money transfer services. It could also lead to increased scrutiny of the money transfer industry by regulators. The complaint could also help to raise awareness of the risks of money transfer scams among consumers.

If the FTC is successful in its lawsuit, it could set a precedent for other lawsuits against retailers that facilitate fraud through their money transfer services. It could also lead to changes in the way that retailers regulate and monitor their money transfer services.

The complaint is also significant because it comes at a time when the FTC is increasingly focused on combating fraud. In recent years, the FTC has filed a number of lawsuits against companies that have allegedly engaged in fraudulent practices. The FTC has also issued a very large number of consumer alerts warning about common fraud schemes.

The FTC’s lawsuit against Walmart is a sign that the agency is serious about cracking down on fraud. It is also a reminder to consumers to be careful when using money transfer services.

The Impact on Walmart

The impact on Walmart, if the Federal Trade Commission’s Amended Complaint is successful, could be very significant.

For Walmart, the potential impact could include:

• Monetary damages: The FTC is seeking monetary damages from Walmart, which could be significant.
• Injunctive relief: The FTC is also seeking injunctive relief, which could require Walmart to make changes to its money transfer services. This could include, for example, requiring Walmart to implement stricter fraud prevention measures or to provide more information to consumers about the risks of money transfer scams.
• Damage to reputation: The lawsuit could also damage Walmart’s reputation, which could lead to lost customers and sales.

For consumers, the potential impact could include:

• Restitution: If the FTC is successful, it could order Walmart to provide restitution to consumers who have been defrauded through Walmart’s money transfer services.
• Increased protection from fraud: The lawsuit could lead to increased protection for consumers from money transfer scams. This could include, for example, stricter regulations on the money transfer industry or more public awareness about the risks of money transfer scams.

It is important to note that the FTC’s lawsuit is still in its early stages, and it is not yet clear what the outcome will be. However, the potential impact on Walmart and consumers could be significant as we have seen in past complaints against Western Union and MoneyGram.

Consumer Advice

If you are considering using a money transfer service, be sure to do your research and make sure that the company is reputable. You should also be aware of the risks of fraud and take steps to protect yourself.

Here are some additional things that consumers can do to protect themselves from money transfer scams:

• Do your research: Before using a money transfer service, be sure to do your research and make sure that the company is reputable. You can check with the Better Business Bureau or with consumer protection agencies. Scammers have created fake money transfer companies, as well as imitated real money transfer services.
• Be wary of unsolicited offers: If you receive an unsolicited offer for a money transfer service, be wary. Scammers often use unsolicited offers to target victims.
• Ask questions: If you are considering using a money transfer service, be sure to ask questions about the company’s policies and procedures. You should also ask about the fees that the company charges.
• Use caution with wire transfers: Wire transfers are often used in money transfer scams. If you must use a wire transfer, be sure to use a reputable company or bank and to verify the recipient’s information before sending the money.
• Be aware of the risks: Money transfer scams can be very costly. If you think you may have been a victim of a money transfer scam, contact your bank or credit card company immediately. You should also file a complaint with the FTC.

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