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FTC sues Walmart for failing to protect money transfer customers from scammers

By on June 29, 2022 0

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The Federal Trade Commission filed a lawsuit against Walmart over allegations that the retailer allowed scammers to defraud customers out of millions of dollars in wire transfers. The retailer quickly denounced the FTC’s action as baseless in a corporate statement.

According to the agency, Walmart has “long been aware” of wire transfer scams, such as those involving people claiming to be in need, impersonating government agents, and fake lotteries and prizes.

The FTC alleged that Walmart failed to properly train employees and monitor and handle suspicious money transfer activity. He also pointed to policies such as paying for transfers in cash and no identification requirements that allowed fraudsters to quickly collect fraudulent payments from multiple locations.

The agency cited compliance reviews of wire transfer partners MoneyGram and Ria Financial Services that found insufficient employee knowledge, missing fraud awareness documents and other issues.

Walmart has offered e-transfers for years, with partners like Western Union, MoneyGram, and Ria. The government’s lawsuit comes as Walmart expands its financial services to increasingly become a one-stop-shop for financial and other services, which the FTC also alluded to.

In his statement, Walmart called the lawsuit “factually flawed,” “legally baseless,” and an “unprecedented extension of the FTC’s authority.” The company said the FTC Chairman “denied Walmart the due process of hearing directly from the company” and that the Justice Department refused to take the case to court.

Walmart also said it lowered transfer prices and estimated it saved consumers $6 billion in transfer fees.