U.S. Judge Dismisses FTC Claim Against Walmart Over Money Transfer Services

A Chicago U.S. District Judge, Manish Shah, has dismissed a central claim in a Federal Trade Commission (FTC) lawsuit against Walmart.

The lawsuit accused Walmart of negligence in preventing scam artists from using its funds transfer services to defraud consumers of hundreds of millions of dollars.

Dismissal of Claim:

Judge Shah rejected the FTC’s claim seeking monetary damages under the federal Telemarketing Sales Rule.

This rule prohibits deceptive and unfair acts in telemarketing, specifically banning money transfers to pay for goods and services offered through telemarketing.

The judge ruled that the FTC did not provide sufficient details on how Walmart or its employees knowingly ignored warning signs of fraudulent activities.

Legal Proceedings:

The FTC initially had its Telemarketing Sales Rule claim dismissed in March 2023 but amended its complaint with additional details.

Wednesday’s dismissal was with prejudice, preventing the FTC from revisiting the claim. However, the FTC can still pursue an injunction under the FTC Act, which prohibits unfair methods of competition in commerce.

Response from Parties:

Walmart, headquartered in Bentonville, Arkansas, welcomed the decision, calling the FTC’s case a misguided attempt to expand its enforcement authority.

The retailer emphasized its commitment to consumer safety and preventing scams facilitated through its money transfer services.

Nature of Walmart Services:

Walmart acts as an agent for money transfers provided by companies like MoneyGram, Ria, and Western Union. These services are vulnerable to misuse by fraudsters who employ various schemes, such as impersonating government officials or relatives needing urgent financial assistance.