For years, Walmart turned a blind eye to criminals who coerced victims into sending them wire transfers through its in-store money transfer services, according to the Federal Trade Commission. Walmart has now agreed to pay $10 million to settle the allegations.
FTC’s investigation found that Walmart failed to implement basic anti-fraud safeguards, such as proper employee training and customer alerts.
The FTC also claims that Walmart instructed employees to process payouts even when fraud was suspected. The complaint cites a Walmart reference guide used by staff that said: “If you suspect fraud, complete the transaction.”
“Walmart continued processing fraud-induced money transfers at its stores—funding telemarketing and other scams—without adopting policies and practices that effectively detect and prevent these transfers,” the FTC said. “In some cases, Walmart’s practices have even made it easier for fraudsters to collect fraud-induced money transfers at a Walmart store.”
A Giant in Wire Transfers
Walmart stores handle tens of millions of money transfers each year. Between 2013 to 2018, the stores sent or received nearly $200 million in payments that were the subject of fraud complaints, according to the FTC.
Walmart acts as an agent for multiple money transfer services, including MoneyGram, Ria, and Western Union. It also offers some services under its own brand, such as “Walmart2Walmart” and “Walmart2World.”
Taking Preventative Steps
In addition to paying a $10 million fine, Walmart stated it will no longer process money transfers it suspects may be fraudulent. The company also pledged to stop assisting any sellers or telemarketers it believes could be engaged in wire fraud.
“It’s encouraging to see accountability for larger organizations, like Walmart, to have stronger anti-fraud measures in place,” said Suzanne Sando, Lead Analyst of Fraud Management at Javelin Strategy & Research. “What really stands out to me here is the callout of improving employee training. Proper training often goes overlooked, but it’s a huge piece of fraud prevention.
“Whether or not Walmart was turning a blind eye in this instance, the larger issue is that too often there is a sentiment among larger organizations that if it’s under a certain threshold or doesn’t ultimately affect their cost of business/bottom line, they can let things slide,” she said. “But that attitude affects consumers, and that’s the real issue here.”
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