Walmart Asks for Dismissal of FTC Suit Regarding Fraud Via Money Transfer Services
Walmart is asking a federal court to dismiss The Federal Trade Commission’s (FTC) suit against the retailer for “turning a blind eye” to scammers who used the company’s money transfer system to steal from customers.
Walmart on Thursday described the lawsuit as an “egregious instance of agency overreach” in a public statement and said it had asked for a dismissal.
In a complaint filed in June in a U.S. district court in the Northern District of Illinois, the FTC said Walmart allowed its money transfer services to be used to defraud consumers out of “hundreds of millions of dollars” through telemarketing and other scams and has failed to enact policies to prevent these transfers. According to the FTC, Walmart knew that various telemarketing scams — which work by deceiving people into wiring money — tend to convince people to send money to fraud rings via Walmart’s money transfer services.
“As a result of Walmart’s failure to take appropriate steps to mitigate the problem, consumers have lost substantial sums to frauds through money transfers effected at Walmart,” the lawsuit alleged.
Walmart offers a slew of financial services to customers, including money transfers, credit cards, reloadable debit cards, check cashing and bill payments. The company facilitates payments on money transfer services like MoneyGram, Ria and Western Union as well as through its own programs, such as Walmart2Walmart and Walmart2World.
According to Walmart, its low fee money transfer systems have saved consumers an estimated $6 billion in fees.
“The FTC is trying to hold Walmart liable for the criminal actions of completely unrelated third-party fraudsters, in spite of Walmart’s extensive efforts to prevent those very fraudsters from defrauding our customers, and despite the FTC’s lack of constitutional or statutory authority to bring the lawsuit,” Walmart said in a statement. “Walmart is now — and always has been — dedicated to its customers, and shares the FTC’s goal of protecting customers from fraudsters.”
Walmart previously described the lawsuit as “factually misguided and legally flawed” and accused the FTC of placing the blame on Walmart after already blaming MoneyGram, another company that had been under the supervision of the federal government. The FTC had previously discovered that MoneyGram, which works with Walmart on transfers, had a failure in its anti-fraud interdiction system during an 18-month period, according to a FOIA request from Walmart.
“Walmart has a robust anti-fraud program to help stop third-party criminals who try to use money transfer services to commit fraud, and only a minuscule number of transactions are even alleged to be fraudulent,” Walmart said in a prior statement. “In fact, Walmart has stopped hundreds of thousands of suspicious transactions totaling hundreds of millions of dollars.”
Walmart previously said it plans to “defend against this lawsuit aggressively.”
This is not Walmart’s first brush with the FTC. In May, the FTC fined Walmart $2.5 million in civil penalties in light of allegations that the retailer misled consumers by falsely marketing some products as bamboo. In November, the FTC ordered Walmart and other retailers to to turn over information that would help explain the supply chain crisis.
