Walmart seeks to dismiss lawsuit over money transfers

NEW YORK – Walmart on Monday filed a motion to dismiss a lawsuit filed by the Federal Trade Commission in June that accused the nation’s largest retailer of allowing the use of its money transfer services by scammers, the calling it a “glaring case of agency overreach”.

In its lawsuit, the FTC alleged that for years Walmart failed to properly secure the money transfer services offered in its stores, stealing “hundreds of millions of dollars” from customers. The agency said Walmart failed to properly train its employees, failed to warn customers, and used procedures to allow fraudsters to cash out at its stores. The FTC had asked the court to order Walmart return the money to consumers and impose civil penalties on the company.

In a 41-page document, filed in the United States District Court for the Northern District of the Eastern Division of Illinois, Walmart presented a number of what it called legally flawed allegations, including that the agency did not have “valid constitutional authority to sue for money or an injunction. .” He said the FTC is trying to hold Walmart accountable for the criminal actions of completely unrelated third-party fraudsters, even though Walmart has taken a number of steps to stop such a scam.

Walmart argued that the agency was trying to twist a rule called the Telemarketing Sales Rule that was meant to prosecute telemarketers and those who actively help them, but that Walmart is neither. Walmart also disputed the FTC’s assertion that Walmart engaged in an “unfair” act or practice, or any actual or threatened wrongdoing under Section 5 of the FTC Act.

“To be clear, Walmart is now — and always has been — dedicated to its customers and shares the FTC’s goal of protecting customers from fraudsters,” Walmart’s filing reads. “But this lawsuit is a blatant example of agency overreach.”

Walmart stores allow shoppers to transfer money using three providers – MoneyGram, Ria Financial Services and Western Union Co.

Walmart, based in Bentonville, Arkansas, said it has developed and implemented a host of anti-fraud measures, including warnings to customers and training for employees. Based on data available to Walmart, of nearly 200 million money transfer transactions processed at its namesake U.S. stores between 2015 and 2020, less than 0.08% were the product of fraud, according to the filing. from Walmart. And he said some of that reported fraud might not be fraud at all, making the actual fraud rate even lower.

In Walmart’s argument that the FTC exceeded its authority, Walmart cited an April 2021 Supreme Court case that makes it difficult for the agency to engage in a long-standing practice of seeking to recover the Ill-gotten gains from individuals or companies that steal from consumers. As a result of the decision, the agency will now have to rely on other longer and more complicated legal maneuvers to recover money from those defrauded.

FTC officials could not immediately be reached for comment.

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