Walmart Marketplace Lets Scam Sellers ‘Hijack’ Listings From Legit Amazon Merchants, Class Action Lawsuit Alleges

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A proposed class action lawsuit claims Walmart has enabled, profited from and failed to prevent a form of organized retail crime on Walmart Marketplace involving fraudulent sellers who “hijack” products from legitimate Amazon merchants.

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The sprawling 291-page lawsuit was filed by four small businesses that claim to have fallen victim to a systemic scheme on Walmart Marketplace whereby fraudulent sellers allegedly upload the plaintiffs’ Amazon.com listings verbatim under fake brand names and offer their products for sale without having any inventory or authorization to sell these items.

When an unsuspecting Walmart customer places an order for one of the purportedly “stolen” products, the bogus seller purchases the same item from its rightful Amazon merchant using the consumer’s name and shipping information, the case alleges. Once the product is delivered to the Walmart customer, the fraudulent seller falsely claims that they never got the package and requests a refund from the Amazon merchant, the complaint says.

According to the filing, Walmart “knowingly or recklessly” allows retail crime to occur every step of the way. To start, the defendant enables scammers to “effortlessly” register as Walmart Marketplace sellers without needing to provide valid proof of inventory or the legal right to sell their products, the case contends.

“Defendant Walmart knew that it was attracting and not discouraging the fraudulent seller defendants to become sellers on Walmart Marketplace,” the class action lawsuit says, arguing that the company encourages fraud because it financially benefits from the extra traffic scam sellers bring to its platform.

Per the case, the retailer receives a referral fee from each completed purchase on Walmart Marketplace.

“Therefore, the more sellers and the more products they list and, then, sell, on Walmart Marketplace, the more in referral fee revenue Walmart generates,” the filing notes.

Beyond referral fees, the alleged organized retail crime scheme leads to more commissions and advertising revenue, bolsters the company’s share price and helps it compete with rival e-commerce businesses, the complaint charges.

The case further alleges Walmart has been reckless in failing to identify and stop scammers from operating on its platform. As the suit tells it, the retailer can see, for example, that seller pages display thousands of unrelated products under the same fake brand name, the “hijacked listings” are readily identifiable as listings on Amazon by different merchants and the fraudulent sellers lack internet and e-commerce presence.

The plaintiffs claim that each fraudulent transaction on Walmart Marketplace deprives them of a sale to a legitimate customer and the profit associated with that sale.

What’s more, the Walmart Marketplace fraud lawsuit contends that “[c]ustomers do not want to be placing orders on the Marketplace from third-party sellers who: are engaging in fraud; are not selling real products; are not authorized to sell the listed products; cannot deliver the purchased products; or, cannot respond to and address any issues with the purchased products.”

The suit asserts that the fraudulent sellers operate Walmart Marketplace storefronts including EasyHousewares, Judy OTTO, JoyfulMart, Coey Trading Co. Ltd., Onenbary, Whimsy Whirligig, LuckyJiang and numerous others. The filing points out that scammers may also use other seller aliases on the retailer’s platform.

The lawsuit looks to represent any Amazon merchants domiciled in the United States who fulfilled an order placed by a fraudulent seller that originated on Walmart Marketplace at any time since January 1, 2021.

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