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Millions of Americans look to Walmart as their go-to place to pick up essentials. According to a complaint filed by the FTC, among the people who have come to rely on Walmart for their day-to-day needs are fraudsters who have allegedly used the retail giant’s money transfer services to bilk consumers out of millions of dollars. The FTC lawsuit charges that Walmart’s practice of looking the other way in the face of massive fraud and illegal telemarketing transactions violates the law.

Whether it’s an IRS impersonation scam, a sweepstakes fraud, or one of those “Help, Grandma. I’ve been arrested!” rip-offs, the transfer of money is the lifeblood of con artists – and they depend on a seamless way to convert their cons into cold cash. According to the FTC, that’s where Walmart’s money transfer services come in.

In addition to its retail business, Walmart runs a thriving operation as a financial services provider. Walmart acts as an agent for multiple money transfer services, including MoneyGram, Ria and Western Union, and offers services under its Walmart2Walmart and Walmart2World brands.

There is a good reason why money transfers are a pet payment method for fraudsters. Once a transfer has been picked up, the transaction is almost impossible to reverse. The criminal is often home free while the consumer is left high and dry. The FTC has been sounding the alarm about the role that money transfer operators play in the flimflam ecosystem, resulting in law enforcement actions against MoneyGram and Western Union for their failure to protect consumers who used their services.

You’ll want to read the complaint for details about the FTC’s allegations against Walmart, but it boils down to this. According to the FTC, Walmart turned a blind eye to massive amounts of fraud perpetrated through its money transfer operations. What was in it for Walmart? First, financial services drive retail sales, but Walmart also makes millions of dollars in fees from fraudulent transactions run through its financial services.

The FTC alleges that for years it was Walmart’s policy to issue payouts even in the case of suspicious money transfers. The upshot: Scammers had to go no further than their neighborhood Walmart to pick up the proceeds of their crimes. What’s more, the complaint charges that Walmart’s failure to have a policy in place to spot fraudulent transfers – and when the company finally put a policy in place, its failure to follow its own procedures – greased the wheels for scammers. Other allegedly illegal practices the FTC cited in its complaint: Walmart’s failure to effectively train its staff, and Walmart’s failure to adequately warn its money transfer customers of the risk of fraud.

The FTC also alleges that despite an express provision in the Telemarketing Sales Rule that prohibits money transfers from being used to pay for telemarketing purchases, Walmart has failed to take steps necessary to comply with that ban.

Filed in federal court, the lawsuit seeks – among other things – money back for defrauded consumers, civil penalties, and top-to-bottom changes in how Walmart runs its money transfer operations. Even at this early stage, the message to other companies is that it’s bad business to turn a blind eye in the face of fraud.

Do you know someone who has lost money to a transfer scam? The FTC has resources to help them spot the tell-tale signs of a rip-off.

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The purpose of this blog and its comments section is to inform readers about Federal Trade Commission activity, and share information to help them avoid, report, and recover from fraud, scams, and bad business practices. Your thoughts, ideas, and concerns are welcome, and we encourage comments. But keep in mind, this is a moderated blog. We review all comments before they are posted, and we won’t post comments that don’t comply with our commenting policy. We expect commenters to treat each other and the blog writers with respect.

  • We won’t post off-topic comments, repeated identical comments, or comments that include sales pitches or promotions.
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