U.S. FTC Sues Walmart For Allegedly Allowing Money Transfer Services For Fraud

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The U.S. Federal Trade Commission it sued Walmart Inc (WMT.N), alleging the company had done too little to prevent scam artists. This was from using its money transfer services for fraud that cost consumers tens of millions of dollars annually. Walmart, which offers some financial services, acts as an agent for money transfer services such as MoneyGram (MGI.O) and Western Union (WU.N).

For years, the FTC said, Walmart’s policy was to issue payouts even when the fraud was suspected. And that the retailer failed to take other actions to prevent consumers from being defrauded. Consumers have reported tens of millions of dollars annually in fraud-induced money transfers processed by Walmart employees,” the FTC said in a complaint filed in the U.S. District Court for the Northern District of Illinois.

The complaint alleges that the retailer “is well aware” that fraudsters posing as everything from distressed grandchildren to government agents, or employing other known scams. And also using Walmart’s money transfer services to get cash to fraud rings.

Nevertheless, Walmart has continued processing fraud-induced money transfers at its stores funding telemarketing and other scams. This is without adopting policies and practices that effectively detect and prevent these transfers,” the complaint said.

Walmart said in a statement that it would fight what it called a “factually flawed and legally baseless” lawsuit. However, the FTC said it was asking a court to order Walmart to return lost funds to consumers and pay civil penalties. The FTC vote to sue was 3-2, with the three Democrats on the panel in favor and two Republicans opposed.

-Reuters.

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