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FTC lawsuit alleges Walmart turned a blind eye to fraud with money transfer services

After costly losses, Federal Trade Commission is seeking cash back for consumers
Lawsuit Alleges Walmart Turned a Blind Eye to Fraud
Posted at 5:00 AM, Jul 19, 2022
and last updated 2022-07-19 08:36:43-04

COLORADO SPRINGS — Money transfers are a way to send money to someone who is in a separate location from you. Unfortunately, this form of payment is frequently requested by fraudsters behind a variety of scams because it’s nearly impossible to recover the money after it’s picked up.

The FTC has proven in recent years it will go after money transfer services, alleging they failed to protect consumers. Federal investigators say scammers are relying on Walmart money transfers as a primary way to receive payments and we’ve seen some examples right here in southern Colorado.

From secret shopper scams we've reported on. ”I need to deposit this check and I need to purchase 8 $1,000 money orders and if I don’t do this within 48 hours they’re coming to my house,” said Dakota Rogers who contacted News5 after she got a check in the mail with directions to use Walmart money services to pay fraudsters.

We’ve also seen this unfold in a fraudulent puppy purchase scheme. ”Use Walmart Pay and ship it to Walmart in my town– someone picked it up within ten minutes and he texted me and said ok I got it you’ll get your dog tomorrow,” Mary Bucher told News 5.

Unfortunately, many consumers make the payment and don’t find out until later that someone stole their money.

”I’m a nice person. I expect too much from dirty rotten scammers,” said Bucher when she found out someone took her cash she thought she was paying for a puppy that never arrived.

The Federal Trade Commission is trying to slow down this trend, filing a lawsuit against Walmart claiming the company did not properly train its employees, failed to warn customers, and used procedures that allowed fraudsters to cash out at its stores.

”Because Walmart is a very legitimate company when consumers receive a request to wire money through Walmart it instantly gives that sense of security and legitimacy. Walmart is a large place, it’s crowded, it seems safe,” said Adah Rodriguez of the Better Business Bureau of Southern Colorado. “I think consumers also assume that Walmart has some of these protections in place and these policies and training to catch some of this fraudulent behavior.”

According to the FTC from 2013 to 2018 more than $197 million in payments subject to fraud complaints were sent or received at Walmart, with more than $1.3 billion in related payments also possibly connected to the fraud.

”This investigation and lawsuit are huge because I hope that it prompts other entities like Walmart to put these protections in place and really put the right foot forward to help protect consumers and decrease this victimization,” said Rodriguez.

On its corporate website, Walmart offered a response to the lawsuit that reads in part:

“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.”

If the FTC wins this lawsuit it's asking the court to order Walmart to return money to consumers and to impose civil penalties for Walmart’s violations. If you lost money to fraudsters by paying them through Walmart services, this is a case you should be following.

Read the FTC lawsuit and allegations

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