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Walmart Asks Court to Dismiss Federal Trade Commission Wire Fraud Lawsuit

— August 30, 2022

Walmart has motioned to dismiss an F.T.C. lawsuit alleging that the company negligently allowed con artists to receive hundreds of millions of dollars in fraud-related wire transfers at its stores.

Walmart has filed a motion to dismiss a Federal Trade Commission lawsuit accusing the world’s largest retailer of allowing its money-transfer service to be used by scam artists.

According to The Associated Press, the F.T.C. specifically alleges that, for years, Walmart failed to properly secure its money-transfer service, implicitly permitting the theft of “hundreds of millions of dollars” from consumers.

The F.T.C. claims that Walmart did not properly train its employees, and used procedures that allowed con artists to receive fraudulent money orders at its stores.

The agency has since asked the courts to order Walmart to reimburse victims and to impose additional civil penalties on the company.

In its motion to dismiss the case, Walmart called the F.T.C.’s lawsuit “an egregious instance of agency overreach.”

“The FTC’s lawsuit is an egregious instance of agency overreach,” Walmart said in a corporate statement. “The FTC is trying to hold Walmart liable for the criminal actions of completely unrelated third-party fraudsters, in spite of Walmart’s extensive efforts to prevent those very fraudsters from defrauding our customers, and despite the FTC’s lack of constitutional or statutory authority to bring the lawsuit. Walmart is now—and always has been—dedicated to its customers and shares the FTC’s goal of protecting customers from fraudsters.”

Flag of the United States Federal Trade Commission; image by United States Federal Trade Commission (FTC), Public domain, via Wikimedia Commons. Deceptive debt collectors banned.
Flag of the United States Federal Trade Commission; image by United States Federal Trade Commission (FTC), Public domain, via Wikimedia Commons.

Walmart further noted that, not only did the federal Department of Justice decline to represent the F.T.C., but that two of the agency’s own commissioners disagreed with the decision to sue Walmart for its alleged role in facilitating fraudulent money transfers.

“The skepticism about the F.T.C.’s case is well-founded,” Walmart said, arguing that the agency’s case rests exclusively on “expansive legal theories” that conflict with “clear constitutional and statutory limits on its authority.”

Walmart attorneys have since urged the court to dismiss the F.T.C.’s claim, arguing that the agency lacks the requisite authority to “micromanage” Walmart’s internal security protocols.

“The FTC has no authority to act as a freewheeling compliance auditor or inspector general, ‘micromanaging’ the details of Walmart’s anti-fraud program ‘in accordance with [its] wishes’,” Walmart states in its motion.  “Rather, the FTC’s authority is limited by the Constitution, by the FTC Act, and by its own regulations. None of those sources supports the FTC’s claims. The case should be dismissed.”

The Associated Press notes that Walmart’s motion cites an April 2021 Supreme Court decision that effectively curbed the F.T.C.’s ability to engage in its “long-time” practice of seeking to recover “ill-gotten gains” from individuals or companies that steal from consumers.


Walmart fires back at FTC over money-lending services lawsuit: ‘Egregious instance of agency overreach’

Walmart seeks to dismiss FTC lawsuit over money transfers used by scam artists

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