Walmart to pay $10 million to settle US FTC lawsuit over money transfer fraud

By Jonathan Stempel

(Reuters) -Walmart has agreed to pay $10 million to settle a U.S. Federal Trade Commission civil lawsuit accusing the world’s largest retailer of ignoring warning signs that fraudsters used its money transfer services to fleece consumers out of hundreds of millions of dollars.

The settlement was filed on Friday in Chicago federal court, and requires approval by U.S. District Judge Manish Shah.

Walmart (NYSE:WMT) also agreed not to process money transfers it suspects are fraudulent, or help sellers and telemarketers it believes are using its services to commit fraud.

"Electronic money transfers are one of the most common ways that scammers tell consumers to send them money, because once it’s sent, it’s gone for good," said Christopher Mufarrige, director of the FTC’s consumer protection bureau. "Companies that provide these services must train their employees to comply with the law and work to protect consumers."

The Bentonville, Arkansas-based retailer did not admit or deny wrongdoing in agreeing to settle.

Walmart said in a statement it was pleased to settle and shared the FTC’s goal of protecting consumers from fraudsters, including from fraud-induced money transfers.

In its June 2022 complaint, the FTC accused Walmart of turning a blind eye to fraudsters who used its money transfer services to cash out at its stores.

Walmart acts as an agent for money transfers by companies such as MoneyGram, Ria and Western Union (NYSE:WU). Money can be hard to trace once delivered.

The FTC said fraudsters used many schemes that included impersonating Internal Revenue Service agents, impersonating family members who needed money from grandparents to avoid jail, and telling victims they won lotteries or sweepstakes but owed fees to collect their winnings.

Shah dismissed part of the FTC case last July but let the regulator pursue the remainder. Walmart appealed from that decision. Friday’s settlement would end the appeal.

The case is Federal Trade Commission v Walmart Inc, U.S. District Court, Northern District of Illinois, No. 22-03372.