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Walmart attempts to dismiss FTC lawsuit over money transfers

By Nithya Bose in Business News, posted August 30, 2022

Walmart has filed a motion to dismiss a Federal Trade Commission complaint accusing the company of allowing scammers to exploit its money-transfer services.

The motion states the FTC’s June lawsuit an “egregious instance of agency overreach.”

The move is in response to an FTC lawsuit which claims Walmart did not protect the money-transfer services provided at its stores for years, taking "hundreds of millions of dollars" from customers.

The retailer is also charged with not properly training its employees, failing to inform customers, and employing methods that enabled fraudsters to exploit.

The agency said Walmart didn’t properly train its employees, failed to alert customers, and used procedures that allowed fraudsters to cash out at its stores.

The FTC is trying to force Walmart to refund customers' money and to levy civil fines against the firm.

Walmart brought up a 41-page brief filed in the US District Court for the Northern District of Illinois Eastern Division.

It includes statements that the agency lacked "constitutionally valid authority to sue for money or injunctive relief."

It says the FTC is attempting to make Walmart accountable for the illegal activities of entirely unrelated third-party fraudsters.

The filing also states Walmart has implemented several anti-scam measures.

Walmart argued that the agency is attempting to twist a regulation known as the Telemarketing Sales Rule.

It was meant to go after telemarketers and those who actively assist them, both of which Walmart is not.

The firm also disputed the FTC's claim that Walmart engaged in an "unfair" act or practice, or any ongoing or future misconduct under Section 5 of the FTC Act.

The Walmart filing said: “To be clear, Walmart is now — and always has been — dedicated to its customers and shares the FTC’s goal of protecting customers from fraudsters.

“But this lawsuit is an egregious instance of agency overreach.”

Customers may transfer money at Walmart stores using three different providers like MoneyGram, Ria Financial Services, and Western Union Co.

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Walmart claims it has created and implemented a slew of anti-fraud initiatives, including consumer alerts and staff training.

Its filing mentions that fewer than 0.08 percent of around 200 million money-transfer transactions handled at its US namesake stores between 2015 and 2020 were apparently the result of fraud.

It further stated that some of the reported fraud may not have been fraud at all, making the true fraud rate even lower.

Walmart referenced an April 2021 Supreme Court case in its claim that the FTC overstepped its power.

The result makes it possible for the agency to participate in a long-standing practice of trying to recover ill-gotten profits from individuals or organizations who steal from consumers, adds the retailer.

As a result of the decision, the agency will now have to depend on longer and more difficult legal processes to recover funds from fraudulent people.

The FTC's spokesman, Jay Mayfield, declined to comment on Walmart's move but stated that the agency will file its response on October 5.

Source: The Washington Post

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