FTC sues Walmart for fraudsters’ use of a money transfer unit

New York — The Federal Trade Commission said Tuesday it has sued Walmart for allegedly allowing money-transfer services to be used by scam artists who stole “hundreds of millions of dollars” from customers.

In the lawsuit, the agency claimed that for years, Walmart failed to properly secure the money transfer services offered in its stores. The agency said Walmart did not properly train its employees, failed to alert customers, and used procedures that allowed fraudsters to cash out in its stores. The Federal Trade Commission is asking the court to order Walmart to return the money to consumers and impose civil penalties on the company.

“While fraudsters used their money transfer services to withdraw funds, Walmart looked the other way and took millions in fees,” Samuel Levine, director of the Federal Trade Commission’s Office of Consumer Protection, said in a statement announcing the action.

Walmart described the lawsuit as “factually flawed and without legal basis.” She said the FTC chair Walmart refused due process for a direct hearing from the company, and said the Justice Department refused to take the case to court.

Walmart, based in Bentonville, Arkansas, said the agency was seeking to blame the company for fraud that the agency had already attributed to another company, at a time when that company was under the direct supervision of the federal government.

“Walmart will defend the company’s strong anti-fraud efforts that have helped protect countless consumers, all while driving Walmart to lower prices and save an estimated $6 billion in money transfer fees,” the company said.

In addition to its retail business, Walmart offers consumer financial services in its stores, including money transfers, credit cards, reloadable debit cards, and bill payments.

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