WU - FTC sues Walmart for facilitating fraud that 'fleeced customers' out of millions

The Federal Trade Commission launched a suit against Walmart ( NYSE: WMT ) on Tuesday alleging the company facilitated fraud for years.

The agency alleged that Walmart allowed its money transfer services to be hijacked by scammers who, in turn, took advantage of consumers. The suit alleges employees were not properly trained to warn customers and that executives “turned a blind eye” to the popular schemes that included IRS impersonation and sweepstakes scams.

“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. “Consumers have lost hundreds of millions, and the Commission is holding Walmart accountable for letting fraudsters fleece its customers.”

The FTC noted that its suit against Walmart is similar to those previously brought against money transfer services such as MoneyGram ( MGI ) and Western Union ( WU ). The latter paid a $586M penalty in March to settle a similar case.

According to the FTC, $197 million in payments that were the subject of fraud complaints were sent or received at Walmart ( WMT ) between 2013 and 2018, “with more than $1.3 billion in related payments also possibly connected to the fraud.”

Walmart ( WMT ), for its part, staunchly denied the allegations and called the FTC’s suit “factually flawed and legally baseless.”

“The Chair refused Walmart the due process of hearing directly from the company, and even the Justice Department refused to take this case to court,” a company statement read. “Claiming an unprecedented expansion of the FTC’s authority, the agency seeks to blame Walmart for fraud that the agency already attributed to another company while that company was under the federal government’s direct supervision.”

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