Walmart Responds to FTC's
FTC Lawsuit Against Walmart is Unfounded and Ignores the Billions Walmart has
narrowly divided Federal Trade Commission (“FTC”) has
filed a misguided lawsuit
against Walmart regarding money transfer services
that the Company offers to consumers. Here’s what you need to know about the
Since Walmart began offering our customers flat, low fee money transfer services
at our stores,
the company has saved
consumers—particularly the unbanked and underbanked— an estimated $6 billion in
fees by bringing
important competition to the money transfer industry.
Walmart has a robust
anti-fraud program to help stop third-party criminals
who try to use money transfer services to commit fraud, and only a miniscule
number of transactions are even alleged to be fraudulent. In fact, Walmart has
stopped hundreds of thousands of suspicious transactions totaling hundreds of
millions of dollars.
Despite Walmart’s anti-fraud programs,
the FTC is trying to blame the
Company for actions by third parties,
including fraud the FTC has already acknowledged was caused by another
company—while that company was under federal government oversight through a
compliance monitor, and during a period when that company’s own fraud prevention
system had failed.
This civil lawsuit is factually misguided and legally flawed. In fact, it was
approved by the FTC by the narrowest of margins after Chair Lina Khan
refused Walmart the due
process of hearing directly from the company,
and then the Department of Justice refused to take this case to court.
the fact that the Justice Department took a pass on this lawsuit and two of the
FTC’s own Commissioners voted against it, the FTC has unfortunately chosen to
pursue a misguided lawsuit that
distorts existing law by
attempting to hold Walmart strictly liable for the wrongdoing of third-party
criminals, despite all
our efforts to stop fraudsters.
Walmart will defend against this lawsuit aggressively.
Pro-consumer competition in the money transfer industry is too important to be
threatened by the unfortunate decisions of a few Commissioners of the FTC, and
Walmart remains focused on fighting fraud and delivering low prices to our
Keep reading to learn more about how Walmart has disrupted the money transfer
market to help consumers, how Walmart fights fraud, and the problems with the
How Walmart Disrupted the
Money Transfer Market and Saved Consumers Billions
Walmart is dedicated to serving our customers by providing everyday low prices
to help people live better. We are proud to offer customers convenient and
budget-friendly one-stop shopping and services that are accessible to all. As
part of delivering on that mission, Walmart offers a number of financial
services in-store, including money orders, bill payment, check cashing, gift
cards, branded credit cards, and money transfers—the financial service product
that is the subject of the FTC’s lawsuit.
Money transfers are just one component of our overall business. They provide an
important service to millions of customers who are often excluded from
traditional financial services, and rely on Walmart to send or receive money
from family and friends.
Walmart serves as an “agent” of other companies that actually transmit the money
from one location to the other. Walmart first began offering money transfers as
a MoneyGram agent in 2005, and later became an agent for Western Union.
Over time, Walmart saw an opportunity to lower prices for our customers by
introducing a white label money transfer service. In 2014,
Walmart partnered as an agent for Ria to launch Walmart2Walmart, a new
low-cost money transfer service built around transparent, everyday low prices.
This new service gave consumers another choice to send or receive cash in a
market that had been dominated for years by MoneyGram and Western Union. As
explained in the
Wall Street Journal, by offering money transfer fees “as much as 87%
below the competition,” Walmart’s innovative and disruptive entry into the money
transfer business has been especially beneficial to “financially vulnerable”
unbanked and underbanked consumers who often lack access to traditional
In addition to saving our own customers an estimated
$2.4 billion in fees since launching Walmart2Walmart, our entry into the
market caused MoneyGram and Western Union to cut their prices, saving consumers
an estimated additional $4 billion in fees.
How Walmart Helps Fight Fraud
While saving consumers billions by shaking up the money transfer market, Walmart
has also worked hard to keep those same consumers safe by helping stop
third-party criminals from using money transfers to scam customers. And
Walmart’s efforts are working. Walmart has stopped hundreds of thousands of
suspicious transactions totaling hundreds of millions of dollars. Our efforts
have been incredibly effective, resulting in fewer than 2 out of every 10,000
money transfers at Walmart being reported as possibly fraudulent in 2021. Below
are some notable steps that Walmart takes to ensure that customers can feel
confident using our financial services products.
Walmart Works with Law
Enforcement, Non-Profit, and Private Sector Partners to Combat Fraud
Walmart routinely works with law enforcement and government agencies to stop
fraud and other crime. The Company has made significant contributions to
enforcement efforts, and has been recognized by various regulators and law
For example, after detecting a fraud trend in Colorado, Walmart started an
investigation and worked with law enforcement to apprehend a fraudster who
scammed victims across several states. DOJ ultimately charged the fraudster with
defrauding victims out of more than
$3 million through a property rental scam.
CNBC reported that technology developed by Walmart helped the Company
identify and freeze millions of dollars in suspected gift card fraud, and
Walmart turned those funds over to law enforcement—keeping them out of the hands
of fraudsters and helping the government support fraud victims.
Walmart also works with corporate and non-profit partners to help prevent
financial services fraud. For example:
Walmart shares information
about trends and patterns in reported fraud with money transfer principals
MoneyGram, Ria, and Western Union.
Walmart participates on the
Strategic Board of Advisors for the Knoble, a non-profit network of financial
crime experts, on an initiative to combat financial services fraud.
Walmart Educates Customers to Help Prevent Fraud
Walmart provides warnings and customer-facing resources to help our customers
recognize frauds and scams before they fall victim. These resources are
available in Walmart Money Centers and online.
Walmart has customer-facing
fraud warnings in our stores to raise consumers’ awareness and prevent fraud.
Walmart provides fraud
awareness brochures in English and Spanish.
Walmart plays fraud warning
videos in more than 3,700 stores on prominent big-screen televisions in the
money center or at the customer service desk. These videos provide information
about various specific scam types.
Walmart also provides
customers a printout prior to money transfers being completed (or disbursed
electronically if the money transfer is staged online or via a MoneyCenter
kiosk). This printout contains warnings about fraud and contact information for
Consumers who initiate money
transfers online are also warned about potential scams.
Walmart’s webpage dedicated to money transfers contains a comprehensive
fraud warning, which educates customers about telemarketing scams, how to
recognize when they may be the target of a scam (like if they have been asked to
make a transfer in order to receive lottery winnings, or to pay the IRS or
police to get out of a warrant), and how to submit a complaint to MoneyGram, Ria,
Western Union, and/or the FTC. The warning also contains links to helpful
resources, including the IRS’s “Common Tax Scams” page, the FTC’s article “How
to Avoid A Scam,” and a report from the National Council on Aging entitled “Top
10 Financial Scams Targeting Seniors.” This information is available on the
money transfer home page, educating customers before they even begin the process
of sending a transfer.
Walmart also has an entire
section of our website dedicated to
fraud information, which includes, among other things, information on
various frauds and scams, such as government imposter scams, grandparent scams,
and tech support scams. The fraud webpage also educates consumers on techniques
fraudsters may use and tips on how to avoid fraud—such as not providing gift
card numbers over the phone. It also includes a link to the FTC’s fraud report
and encourages customers concerned that they may have been defrauded to contact
the FTC or the Consumer Fraud Division of the customer’s state’s Attorney
Trains our Associates to Help Fight Fraud
Walmart associates are part of a large team dedicated to preventing fraud.
Before Walmart associates can process money transfers, they must complete
computer-based anti-fraud training. Each year they go through additional
computer-based training on Walmart’s financial services compliance procedures
and how to apply those procedures to identify, prevent, and report fraud and
other suspicious activity. Walmart has developed our own register “lock-out”
function so that associates who are not current on required training cannot
process money transfers.
Through Walmart’s anti-fraud training, associates who process financial services
transactions are trained to recognize red flags suggesting potential fraud, such
as customers who are on the telephone with someone instructing them to send
money, customers who are concerned about an emergency situation, or customers
who have not met the sender or receiver of a money transfer. Walmart also trains
associates to ask customers questions, such as how they know the receiver and
why they are sending money. And associates are trained not to process the
transaction if they suspect fraud.
Associates are also prompted to ask specifically whether customers are
conducting a money transfer based on outreach from a telemarketer. If the
customer says that he or she is sending money to pay for a telemarketing
purchase, Walmart’s point of contact services system (“POCS”) terminates the
In addition to annual computer-based training, Walmart takes other steps to
educate associates about fraud, including:
Providing on-site store
Providing other anti-fraud
messaging to Walmart associates throughout the year, such as before the holiday
season or tax season when the risk of fraud might be higher;
Displaying information about
consumer fraud reports for a particular store on the POCS, which is the screen
associates use to process financial services transactions;
Making training documents
available on the POCS so associates can learn to prevent common types of
fraudulent transactions; and
Displaying a daily knowledge
check question through the POCS that appears when associates sign into their
register, thus providing a resource for continuing education on fraud
Walmart’s Consumer Fraud Team and Fraud Monitoring
Within our Financial Services Compliance team, Walmart has a Consumer Fraud Team
dedicated to anti-fraud measures including, but not limited to, the following:
Analyzing information about
money transfers to identify stores where associates may need additional
Analyzing information about
money transfers and fraud reports to determine whether associates should be
alerted about particular fraud types or trends; and
Visiting and evaluating stores
based on risk and recommending remediation as needed.
Walmart uses fraud controls along with other aspects of our comprehensive
program to prevent fraud. Two primary controls are Walmart’s proprietary Store
Referrals (STaR), real-time interdiction tool, and customer blocking.
Walmart developed STaR (formerly known as eMSAR), a proprietary tool designed to
enable associates to easily report and prevent fraud. The STaR screen on the
POCS allows associates to report and stop suspicious transactions, and it has
been used to stop at least 450,000 suspicious transactions as of May 2022,
totaling more than $740 million.
Blocking & Interdiction:
On a regular basis, the Consumer Fraud Team reviews money transfers reported as
fraud and adds known receivers of reported fraud-induced transfers to a block
What’s Wrong with the FTC’s Misguided Lawsuit
The FTC’s complaint distorts the facts and the law to try and hold Walmart
responsible for a miniscule amount of reported fraud, even though we had an
extensive program to try to stop such fraud, and continuously improve our
anti-fraud efforts to this day. While the FTC faults Walmart for not stopping
every reportedly fraud-induced transfer, the fact is that Walmart has worked
hard to stop fraud and our associates have stopped hundreds of millions of
dollars in suspicious transactions. Below are just some of the problems with the
One major flaw with the FTC’s lawsuit is that it tries to shift blame to Walmart
for reported fraud the FTC itself has already said was caused by a money
transfer principal—and that happened while that company was under a federal
government compliance monitor. Specifically:
In 2018, the FTC publicly said
that a money transfer company failed to prevent millions in fraud because it did
not do what it was supposed to under a 2009 consent order with the FTC.
Much of the reported fraud the
FTC cites in its complaint against Walmart occurred when,
according to the FTC, a principal’s interdiction system—its program for
blocking potential fraud—was not working for 18 months.
The company’s fraud
interdiction system was supposed to hold and prevent the payout of potentially
fraud-induced money transfers, and the FTC acknowledged that the 18-month system
failure allowed millions of dollars in fraud-induced money transfers to be
That massive system failure
happened while the money transfer company was under federal government
oversight, including the FTC consent order and a federal government compliance
monitor. Today, the FTC tries to shift the blame to Walmart for what it has
already said were another company’s failures—which happened on the government’s
Truth about Training
Another big problem with the FTC’s lawsuit is that it wrongly claims that
Walmart did not train associates to deny payouts to suspected fraudsters.
This claim appears to be
largely based on an apparent typo on one page of a training document from
years ago, and is in spite of the fact that other trainings at Walmart
instructed exactly the opposite of what FTC claims.
You can look at Walmart’s
training and judge for yourself—below is just one vivid example of how Walmart
empowered associates to stop fraud.
End-run Around the Supreme
Not only is the FTC’s complaint untethered to the facts, but it is also based on
a flawed and novel legal theory that the FTC is pursuing after a landmark
Supreme Court case said the FTC had been ignoring the law for decades.
The FTC originally focused on
pursuing Walmart under Section 13(b) of the FTC Act. But that became a problem
for the FTC when the Supreme Court ruled on April 22, 2021 that for decades, the
FTC had been wrongly using Section 13(b) to seek monetary remedies without
authority. See AMG Capital Mgmt., LLC v. FTC, 141 S. Ct. 1341 (2021).
The fact is Congress never
gave the FTC the authority under Section 13(b) to threaten companies with claims
for massive monetary amounts (or any monetary amounts). Instead, Section 13(b)
allows the FTC to ask a court to impose “injunctive relief,” ordering a
defendant to stop engaging in improper conduct.
Except in Walmart’s case, as
we described above, Walmart’s anti-fraud efforts are already robust, so there is
no need for injunctive relief requiring Walmart to change. Walmart has never
been in the business of scamming consumers or intentionally enabling fraudsters
to scam our customers, so there is no improper Walmart conduct for a court to
But the FTC appears more
interested in chasing headlines and big dollars, rather than working with
companies like Walmart to fight fraud.
Thus, the FTC pivoted their
focus in this case after AMG to a distorted interpretation of the “Telemarketing
Sales Rule” to effectively try and hold Walmart strictly liable for money
transfers that third-party criminals reportedly persuaded some consumers to
send. Switching their main legal theory to the “Telemarketing Sales Rule” is an
obvious attempt to get around the Supreme Court’s ruling in AMG.
The FTC has never litigated
the “Telemarketing Sales Rule” in the controversial way it’s now doing in the
agency’s new lawsuit against us. The “Telemarketing Sales Rule” is designed to
regulate telemarketers. But there’s no allegation Walmart was a telemarketer and
Walmart was not in league with illegal telemarketers. To the contrary, Walmart
fights very hard to block telemarketers and scammers and help law enforcement
put scammers behind bars.
Instead, the FTC has distorted
the law to claim that whenever a fraudster is successful scamming a victim,
Walmart—rather than the third-party scammer—should be on the hook for the money
victims lost to the scammer, even though Walmart tried hard to stop the
scammers. The FTC’s legal theory is called “strict liability,” and it just isn’t
supported by the law.
We believe the courts will see
the FTC’s lawsuit for what it is: an unprecedented and unfair end-run around the
Supreme Court to attempt to expand the Commission’s authority far beyond what
any statute or its own rules allow.
In fact, Chair Khan
recently gave an interview where she made clear that under her leadership,
the FTC is ready to bring lawsuits the FTC will lose—and will bring those
lawsuits not to enforce existing law, but rather to change the law.
Walmart is going to keep doing what we have been doing—working to provide
customers with important financial services at low, transparent prices. We are
going to continue working hard to prevent third-party criminals from using money
transfers to defraud consumers. And we are going to defend ourselves vigorously
against this lawsuit. The FTC’s decision to pursue Walmart raises serious
questions, including about the government’s own conduct. Among other things, we
want to know how MoneyGram’s colossal interdiction system failure could have
happened—for 18 months—while MoneyGram was supposed to be under government
supervision. We want to know when and how the government found out about this
failure, and what if anything the government did to warn customers and MoneyGram
agents like Walmart about this failure. We have already started asking those
questions through a
FOIA request we filed weeks ago.
In the meantime, we will keep focusing our attention where it belongs—on
improving the lives of our customers.
Walmart's response originally posted