As the largest retailer in the U.S., Walmart is constantly in the news, whether it's for policy changes or the introduction of new products. Shoppers across the country rely on these stores for groceries and daily necessities, and we trust that these stores will have what we need—and, hopefully, our best interests in mind. But now, Walmart is facing backlash for allegedly doing this one thing to customers over the course of several years. Read on to find out what a new lawsuit claims, and how Walmart's practices might have affected you.
Walmart faced backlash earlier this year.
Walmart has recently been the topic of controversy, largely due to its fumbling of what was supposed to be a well-intentioned product. In May, the retailer announced that it would be pulling a Great Value-branded ice cream flavor that was introduced in recognition of Juneteenth—the day that commemorates the ending of slavery in the U.S. The dessert was met with overwhelming criticism on social media, with many calling it a marketing ploy. And while Juneteenth-branded ice cream didn't go over well, customers might have bigger issues with Walmart, according to a new lawsuit filed against the retail giant.
Walmart allegedly "turned a blind eye" to fraudulent activity.
On June 28, the Federal Trade Commission (FTC) announced that it is suing Walmart as a result of money transfer fraud. According to a press release from the FTC, Walmart "turned a blind eye" to scammers who used its money transfer services—which allow you to send money to different store locations—costing customers hundreds of millions of dollars over several years.
"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 Customer Protection, said in the press release. "Consumers have lost hundreds of millions, and the Commission is holding Walmart accountable for letting fraudsters fleece its customers."
According to the complaint filed by the FTC, investigations by law enforcement found that criminals would use Walmart's transfer services to receive fraudulent payments that were taken via different Internal Revenue Service (IRS) schemes, "grandparent" schemes, and sweepstakes scams, among others. Walmart knew about the use of money transfers in scams, the FTC said, but failed to properly warn customers that they might be sending money to scammers. The lawsuit asks that the court order Walmart to return money to consumers, and "impose civil penalties for Walmart's violations."
The FTC said that Walmart employees were not properly trained.
Between 2013 and 2018, the FTC alleges that a total of $197 million in payments that were reported to be fraud were sent and received by Walmart, per fraud databases maintained by other money transfer services. And over $1.3 billion in additional payments were also possibly connected to fraud.
In addition to not protecting customers from making "bogus" payments, the FTC further claimed that Walmart employees were not properly trained on processes, and the company allowed the payout of "suspicious transfers" and for large payments to be picked up in cash—a practice other services don't allow. Even more concerning, the FTC also claimed that, in a reference guide, Walmart wrote, "If you expect fraud, complete the transaction."
Walmart isn't going down without a fight.
Walmart published a lengthy response to the FTC's allegations, dubbing the lawsuit "misguided." Contrary to what the complaint states, Walmart claims that it has actually saved customers an estimated $6 billion in fees "by bringing important competition to the money transfer industry."
The FTC criticized Walmart's anti-fraud policy, which was put in place in Nov. 2014, claiming that it wasn't properly enforced. But according to Walmart, the company has a "robust" program in place to stop third-party criminals looking to commit fraud, noting that "only a minuscule number of transactions are even alleged to be fraudulent."
The retailer said third parties are the actual source of the problem, calling the lawsuit "factually misguided and legally flawed." Walmart also noted how close the vote was to approve the complaint, which was filed after a three to two in-favor vote.
"Pro-consumer competition in the money transfer industry is too important to be threatened by the unfortunate decisions of a few Commissioners of the FTC, and Walmart remains focused on fighting fraud and delivering low prices to our customers," the company wrote in the press release.