Walmart Money Transfer Class Action Says Retailer Has ‘Turned a Blind Eye’ to Rampant Fraud

Walmart faces a proposed class action over its alleged failure to address widespread fraud that has for years plagued its money-transfer services at locations nationwide.

The 39-page lawsuit was filed in Illinois almost a year after the Federal Trade Commission (FTC) alleged the nation’s largest retailer had “turned a blind eye to fraud” on its money-transfer service and allowed consumers to be scammed out of hundreds of millions of dollars.

The filing largely echoes the FTC’s June 2022 complaint, which was partially dismissed in March, in alleging Walmart’s money-transfer service has become an essential, convenient tool for scammers, mainly due to the retailer’s failure to properly train or retrain employees, warn customers about potential fraud, stop cash pickups for large payments and adequately monitor transfer activity to catch fraud before it can occur, among a host of other “deficiencies.”

According to the proposed class action, Walmart is well aware that its money-transfer service has become a breeding ground for telemarketing fraud and scams over the last decade. Despite this, Walmart has continued to process fraudulent money transfers—and collect millions in transfer fees—without implementing or enforcing anti-fraud policies and practices designed to detect and prevent theft, the case says.

“Walmart’s failures on this front often have made it easier for victims to unwittingly send money to fraudsters and for fraudsters to receive payments through money transfers at Walmart locations,” the suit summarizes. “At the same time, these failures have also made it more difficult for consumers and law enforcement to identify and locate the recipients of fraud-induced money transfers.”

“Deficiencies” plague Walmart’s money transfer service, suit alleges

The lawsuit says that although Walmart is well-positioned to tackle and prevent fraudulent money transfers—and obligated by law and contract to do so—a host of self-inflicted internal deficiencies have allowed unusual or suspicious transfer activity to continue unabated, all while Walmart continues to reap commissions, fees and bonuses based on the number of transactions it processes.

According to the case, the bad actors behind many mass-marketing and imposter scams—including online purchase scams, person-in-need or grandparent scams, charity scams, fake government agent scams, debt relief cons, and lottery or prize grifts, among others—have long relied on money transfers such as those offered by Walmart to fraudulently obtain payments from unwitting consumers.

In a telemarketing scam, for instance, consumers are generally instructed by phone, text message or email to send a money transfer, purportedly for goods or services or as a charitable contribution, the case relays. Other con artists ask consumers to send money to help someone in emergency circumstances that don’t exist, the suit expands. Crucially, victims of fraudulent money transfer scams, especially older consumers or those in debt, often send their money transfers from Walmart locations and are sometimes even told by a scammer specifically to send money from a Walmart, the case alleges.

According to the suit, many fraudsters and con artists prefer to use Walmart’s money-transfer services because, quite simply, there are “many convenient locations from which victims can send the money,” the lawsuit explains. In addition, unlike other third parties that utilize money orders or other forms of pay, Walmart pays recipients in cash, even for big-money transfers, the filing says. Scammers are able to pick up money transfers within minutes, at multiple locations, and often can do so anonymously given that that they’re either equipped with a fake ID or Walmart otherwise does not ask for identification, the complaint shares.

Further, Walmart does not limit the maximum amount of money a consumer can send or receive through its money-transfer services and instead relies upon third-party providers, such as MoneyGram, Ria and Western Union, to impose such limits. For many years, the retailer did not ask senders to so much as present ID unless their transfer exceeded the limits set by third-party providers, the suit says.

The case further claims that Walmart has failed to provide adequate training for employees on how to detect and prevent fraud, including by questioning and warning consumers and rejecting suspicious money transfers.

For example, although the FTC issued a prohibition on cash-to-cash money transfers for telemarketing transactions, which went into effect in June 2016 and banned the use of money transfers as payment for goods or services sold through telemarketing, Walmart, “until recently,” failed to share with employees any instructions—or warn consumers—about the rule, the suit says.

Walmart has also failed to properly monitor for fraudulent money-transfer activity by, for instance, keeping an eye out for employees who have been lulled into complacency or, in some cases, “were engaged in suspicious activities or even complicit in frauds” themselves, the suit goes on. Overall, Walmart’s decision to not train or instruct employees to reject payouts for suspicious or potentially fraudulent money transfers, or adhere to critical identity verification procedures, has allowed scammers to more easily get money from unwitting consumers.

Lastly, the filing takes issue with the fraud warnings issued by Walmart to consumers. According to the case, Walmart used to require a money sender to complete a “send form,” which outlined certain fraud warnings and required the consumer to provide their contact information and address and the name and location of the recipient to whom money was being sent. However, in or around late 2019, senders were no longer required to complete a send form and were merely provided “a printout containing consumer fraud warnings in small print,” the suit says.

Lawsuit alleges compliance reviews, audits document Walmart’s fraud prevention failures

Walmart’s contracts with MoneyGram, Ria Financial Services and Western Union, among other vendors relied on by the retailer to send money, lay plain its obligations to detect and prevent consumer fraud at its money-transfer locations, the case relays.

According to the complaint, however, compliance reviews and audits of Walmart locations by MoneyGram and Ria have documented a litany of flaws in the retailer’s fraud-prevention efforts. For instance, in 2018 and 2019, MoneyGram found that “hundreds” of Walmart workers lacked knowledge of “basic and important procedures,” including ID verification requirements, the suit shares. Between January and August 2019, the case states, Ria found that 39 percent of the Walmart stores it audited “were missing fraud awareness materials,” and 24 percent of the stores lacked send forms that provided consumers with front-and-center fraud warning messages.

Per the case, these issues are nothing new at Walmart.

As far back as 2014, for example, a MoneyGram audit of 397 Walmart locations revealed that 39 percent of Walmart locations had untrained primary employees providing money transfer services at its Customer Services Desks and MoneyCenters and 60 percent of the locations had untrained secondary or backup employees.”

It was only in late 2014 that Walmart, despite having been in the money-transfer business for some time, put in place a written anti-fraud and consumer protection program to document its policies and procedures for detecting and preventing fraud, the complaint states. However, even after establishing this program, Walmart “violated its own program requirements,” including by failing to do fraud-detection training within a certain timeframe at locations identified by vendors as having higher incidents of fraud, the suit says.

In some cases, the training required by MoneyGram at particular locations was not completed for months after Walmart’s policies required it. In addition, even though Walmart’s anti-fraud program required Walmart stores to have certain consumer education and awareness materials, including consumer fraud warnings and pamphlets, in many cases, Walmart locations have not complied with those requirements.”

MoneyGram, Ria and Western Union records show that Walmart is to blame for “a substantial amount of fraud-induced money transfers” flowing through the providers’ systems, the filing says. Between January 2013 and December 2018, Walmart locations processed more than $197 million in money transfers that were the subject of complaints and over $1.3 billion in money transfers that were determined by the vendors to be “potentially related to fraud,” the complaint tallies.

“In fact, historically, Walmart has been responsible for more complaints about fraud-induced money transfers than any other agent worldwide,” the case alleges, noting that Walmart was at the center of more than half of the MoneyGram transfer complaints between 2013 and 2018 and 80 to 93 percent of Ria fraud complaints from 2015 through 2018.

Plaintiff scammed out of $4,500 at Walmart, case alleges

The plaintiff, a Skokie, Illinois consumer, claims to have lost $4,500 due to Walmart money-transfer fraud in an apparent scam in which she was told she would be paid to put an advertisement on her car for a month. Per the suit, though the plaintiff was told she would receive $700, she received a check for roughly $5,200, far more than the agreed-upon amount.

From there, the plaintiff was contacted by phone asking her to confirm that she had received the check, the case continues. When she replied that she had but that she had been overpaid, the consumer was told to “deposit the check but to send a money order via Walmart for the $4,500 overpayment,” the filing says.

After doing so, the plaintiff was informed by her bank a few days later that the check she had deposited had bounced, meaning she lost the entire $4,500 she sent via Walmart money transfer, according to the lawsuit.

“It was at this point that Plaintiff realized she was the victim of fraud,” the case says.

After contacting the police, the plaintiff was told after about a week that the wire transfer had already been cashed and that “there was nothing she could do,” the suit claims. To date, the consumer has not been reimbursed for her $4,500 loss, the case says.

Who’s covered by the lawsuit?

The case looks to represent all consumers who have incurred unreimbursed losses due to fraudulent money transfers initiated at a Walmart location.

I’ve lost money through a Walmart money transfer. Can I sign up for the suit?

When a proposed class action is first filed, there’s usually nothing you need to do to join or sign up for the lawsuit. It’s generally only if and when a case settles that the people covered by the litigation, the “class members,” need to act. This usually involves filling out and filing a claim form online or by mail. Consumers may receive direct notice about a settlement outlining their options and legal rights and instructing them on what to do next.

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