Walmart Agrees to $10 Million Settlement Over FTC Lawsuit on Money Transfer Scams

Victims of the fraud are estimated to have lost hundreds of millions of dollars.
Walmart Agrees to $10 Million Settlement Over FTC Lawsuit on Money Transfer Scams
The Federal Trade Commission in Washington on Nov. 18, 2024. Madalina Vasiliu/The Epoch Times
|Updated:
0:00
Walmart has agreed to pay $10 million to settle charges brought by the Federal Trade Commission (FTC), which accused the corporation of turning a blind eye to scammers using its money transfer services to steal funds from customers, the agency said in a June 20 statement.
The lawsuit against Walmart was filed by the FTC in June 2022 at the U.S. District Court for the Northern District of Illinois, Eastern Division. The FTC alleged in the lawsuit that Walmart was “well aware” that fraudsters were inducing people to use the company’s money transfer services to “send money to domestic and international fraud rings.”

Despite this, Walmart “continued processing fraud-induced money transfers at its stores—funding telemarketing and other scams—without adopting policies and practices that effectively detect and prevent these transfers,” the complaint stated. “In some cases, Walmart’s practices have even made it easier for fraudsters to collect fraud-induced money transfers at a Walmart store.

“For years, it was Walmart’s policy or practice not to deny payouts to suspected fraudsters at its stores, but instead to have its employees complete those transactions. Even after it became illegal in June 2016 for cash-to-cash money transfers to be used to pay for telemarketing transactions, Walmart failed to take appropriate steps to prevent those types of transfers at its locations.”

According to the FTC statement, Walmart did not implement effective anti-fraud policies, failed to warn customers about potential money transfer scams, and did not train employees adequately on these matters.

The scammers stole hundreds of millions of dollars from victims between 2013 and 2018, according to the agency.

It has been almost three years since the lawsuit was filed. Walmart has now decided to settle the case. In addition to the $10 million fine, the settlement agreement prohibits the company from providing money transfer services without taking necessary steps to detect and prevent fraud.

Walmart cannot send or pay out any money transfer “that it knows, or consciously avoids knowing, is a fraud-induced money transfer,” the FTC stated.

In a June 20 statement, Walmart said the company will “continue its program of preventing fraud induced money transfers in its capacity as a money transfer services agent.”
“Walmart did not admit to any of the allegations in the lawsuit. The Agreement has been filed with, and is pending approval by, the District Court,” the company stated.

Walmart Blames Fraudsters

In a June 2022 statement, after the FTC lawsuit was filed, Walmart said the complaint was “unfounded.”

At the time, the company said it had a “robust anti-fraud program” to prevent criminals from using its money transfer services for fraud. Walmart argued that it had stopped “hundreds of thousands of suspicious transactions totaling hundreds of millions of dollars.”

“Despite Walmart’s anti-fraud programs, the FTC is trying to blame the Company for actions by third parties.”

Walmart accused the FTC of pursuing a “misguided lawsuit that distorts existing law by attempting to hold Walmart strictly liable for the wrongdoing of third-party criminals, despite all our efforts to stop fraudsters.”

Other Legal Challenges

The FTC lawsuit is one among the many complaints that Walmart has faced over the past year.
In July, a class action lawsuit was filed against the retailer, accusing the company of violating federal privacy laws. Specifically, it alleged that Walmart transmitted personal information of its customers and video titles that they had purchased to Meta without obtaining necessary consent.

Plaintiffs argued that the action violated the Video Privacy Protection Act, a law protecting people’s video rental and purchase histories.

Regarding the lawsuit, Walmart told The Epoch Times in an emailed statement, “We take the privacy and security of our customers seriously and will review the Complaint and respond in Court as appropriate.”

In December 2024, the Consumer Financial Protection Bureau (CFPB) sued Walmart and financial technology company Branch, alleging that the companies violated consumer financial protection laws.

The complaint was related to Walmart’s Spark Driver Program. It accused the retailer of opening deposit accounts for drivers in the program through Branch without their knowledge or explicit permission. The bureau said these actions led to drivers incurring millions of dollars in junk fees.

In an emailed statement to The Epoch Times from a Branch spokesperson, the company defended its practices.

“Branch strongly disagrees with the lawsuit filed today by the CFPB, which misstates the law and facts, and includes intentional omissions to mask the Bureau’s clear overreach,” the spokesperson said in the statement.

“Branch has provided Walmart and their driver partners valuable services allowing quick and easy access to funds via their business accounts—a key fact the Bureau’s press release omits. Despite the company’s extensive cooperation with its investigation, the CFPB refused to engage with Branch in any meaningful way about this matter, instead rushing to file a lawsuit.”

Chase Smith contributed to this report.
Naveen Athrappully
Naveen Athrappully
Author
Naveen Athrappully is a news reporter covering business and world events at The Epoch Times.