In a high-stakes resolution echoing the adage “where there’s smoke, there’s fire,” retail behemoth Walmart has agreed to shell out $10 million to settle a Federal Trade Commission lawsuit alleging the company “turned a blind eye to scammers” who exploited its money transfer services to siphon millions from consumers.

The FTC and Walmart jointly requested that an Illinois federal judge sign off on a stipulated order for injunction and monetary judgment, locking Walmart into a future of tighter oversight in its role as a money transfer service provider.

Walmart Banned From Ignoring Red Flags

As part of the proposed deal, Walmart will face strict constraints. The company will no longer be permitted to process money transfers it knows—or willfully avoids knowing—are fraudulent, per the FTC. In addition, the settlement bars Walmart from aiding any telemarketer or seller who accepts cash-to-cash money transfers in exchange for products, services, or donations requested via telemarketing. The same applies to any operation that solicits upfront payments for loans or credit extensions.

FTC Bureau of Consumer Protection Director Christopher Mufarrige minced no words in Friday’s announcement, warning that money transfers are often the “scammers' payment method of choice,” given the irreversibility of such transactions.

“Companies that offer these services must do more than look the other way,” Mufarrige emphasized. “They must train employees, comply with the law, and protect consumers.”

Walmart Holds Its Ground—But Pays the Price

While the retailer denied wrongdoing, it stated that the settlement ensures Walmart continues its fraud prevention program related to money transfers, a service it provides as an agent for third-party processors.

“Walmart did not admit to any of the allegations in the lawsuit,” the company affirmed in its statement.

The lawsuit stemmed from a 2022 FTC complaint, accusing Walmart of negligently supervising the financial services it hosted at stores, allowing scammers to tap into a pipeline of unsuspecting victims. According to the FTC, these services were exploited by international and domestic fraud rings to carry out multiple scam campaigns.

A $197 Million Problem Hidden in Plain Sight

Between 2013 and 2018, the FTC says over 226,000 consumer complaints—totaling a staggering $197 million—were tied to fraud-induced money transfers processed at Walmart locations via Western Union, MoneyGram, and Ria.

The legal road was bumpy. Initially, U.S. District Judge Manish S. Shah allowed the FTC's Section 5 unfair practices claim to survive but tossed out other claims due to insufficient detail on how Walmart should’ve spotted the fraud. The Telemarketing Sales Rule (TSR) violations were dismissed altogether in July 2023, with the court asserting that Walmart wasn’t liable for third-party charity scams conducted through telemarketing.

The judge’s rulings led Walmart to seek interlocutory appeal, which the Seventh Circuit greenlit last November—setting the stage for potential appellate review before the recent agreement sidestepped further courtroom drama.

Key Legal Players

Representing the FTC were staff attorneys Karen D. Dodge, Matthew G. Schiltz, and Rachel F. Sifuentes. Walmart was defended by Sean M. Berkowitz of Latham & Watkins LLP.