Walmart Facing a Fine of $10 Million Due to Their Wire Transfer Policies
Walmart has agreed to pay a $10 million settlement to the Federal Trade Commission (FTC) to resolve allegations that the retail giant failed to implement effective anti-fraud safeguards in its in-store money transfer services[1]. The FTC claims that Walmart turned a blind eye to scammers using its wire transfer services from 2013 through 2018, failed to implement effective anti-fraud policies and procedures, did not properly train employees to recognize and prevent fraud, and did not warn customers about potential fraud risks associated with money transfers at its stores[1][2].
According to the FTC, between 2013 and 2018, Walmart stores sent or received nearly $200 million in payments that were the subject of fraud complaints[1]. The settlement reflects the FTC's stance that companies involved in money transfers must take proactive steps to prevent fraud, including training staff, monitoring transactions, and informing consumers about risks.
The settlement requires Walmart to adopt and implement a comprehensive anti-fraud programme, provide regular training to its employees, and issue customer alerts when fraud is suspected[1][2]. The company has also pledged to stop processing money transfers it suspects may be fraudulent.
Suzanne Sando, Lead Analyst of Fraud Management at Javelin Strategy & Research, expressed encouragement at the accountability shown by larger organizations like Walmart in strengthening their anti-fraud measures[1]. However, she expressed concern about the sentiment among larger organizations that if an issue doesn't affect their cost of business or bottom line, they can let things slide, which affects consumers[1].
Walmart acts as an agent for multiple money transfer services, including MoneyGram, Ria, and Western Union[1]. The company offers some services under its own brand, such as "Walmart2Walmart" and "Walmart2World." It is worth noting that Walmart stores handle tens of millions of money transfers each year[1].
The FTC alleges that Walmart's practices made it easier for fraudsters to collect fraud-induced money transfers at a Walmart store[1]. No further specific operational details regarding Walmart’s internal procedures or exact failures were provided in the sources, but the core issues were inadequate anti-fraud measures, poor employee training, and insufficient customer warnings about scams[1][2].
The settlement is a reminder for all businesses involved in money transfers to prioritise anti-fraud measures and consumer protection. It is crucial for companies to be vigilant in detecting and preventing fraud to protect their customers and maintain trust in their services.
[1] FTC Press Release, Walmart to Pay $10 Million to Settle FTC Charges that it Failed to Implement Effective Anti-Fraud Safeguards in its In-Store Money Transfer Services (20 July 2022), https://www.ftc.gov/news-events/press-releases/2022/07/walmart-pay-10-million-settle-ftc-charges-it-failed-implement
[2] FTC Complaint, Walmart, Inc., 2022 U.S. Dist. LEXIS 134178 (D.D.C. 2022), https://www.ftc.gov/system/files/documents/cases/walmart-inc-complaint-2022-07-20.pdf
In light of this settlement, businesses in the finance and general-news sectors, particularly those involved in money transfers like Walmart, must prioritize implementing comprehensive anti-fraud programs to safeguard their customers and maintain public trust. Ongoing employee training and customer alerts are crucial in detecting and preventing fraud, as demonstrated by Walmart's recent agreement with the Federal Trade Commission over allegations of negligence in anti-fraud procedures. Crime and justice matters can significantly impact businesses, emphasizing the importance of adhering to best practices in the industry.
