Walmart to Pay $10M in FTC Money Transfer Fraud Case

Walmart to Pay $10M in FTC Money Transfer Fraud Case

Introduction

Walmart has agreed to pay $10 million to settle a civil lawsuit filed by the Federal Trade Commission (FTC), which accused the retail giant of failing to prevent scammers from using its money transfer services to defraud consumers of hundreds of millions of dollars.

Settlement Terms and Conditions

The settlement, filed in a federal court in Chicago, still awaits approval from a U.S. District Judge. As part of the agreement, Walmart has committed to refraining from processing money transfers it suspects to be fraudulent. Additionally, it must avoid aiding sellers or telemarketers it believes are using its services to perpetrate scams.

FTC Highlights Role of Money Transfers in Fraud

“Electronic money transfers are one of scammers’ favorite tools,” said the director of the FTC’s consumer protection bureau. “Once the money is sent, it’s almost impossible to recover. Companies must train staff properly and take steps to protect consumers.” Walmart did not admit or deny wrongdoing as part of the settlement and has not responded to requests for comment.

FTC’s Allegations and Walmart’s Role

The FTC’s lawsuit, originally filed in June 2022, accused Walmart of ignoring red flags that fraudsters were exploiting its services. Walmart, which acts as an agent for money transfer companies like Western Union and MoneyGram, allegedly allowed scammers to cash out funds in its stores.

Fraud Tactics Used by Scammers

According to the FTC, common scams involved impersonating IRS agents, claiming to be relatives in legal trouble, or telling victims they had won fake lotteries and needed to pay fees to claim their prizes. Although a judge dismissed parts of the case in July, the remaining claims continued. This settlement will resolve the ongoing appeal.