back to article Walmart accused of turning blind eye to transfer fraud totaling millions of dollars

America's Federal Trade Commission has sued Walmart, claiming it turned a blind eye to fraudsters using its money transfer services to con folks out of "hundreds of millions of dollars." In a lawsuit [PDF] filed Tuesday, the regulator claimed the superstore giant is "well aware" of telemarketing fraudsters and other scammers …

  1. martinusher Silver badge

    Bind or Won't See?

    Every service counter and checkstand at our local WalMart has a prominently displayed notice telling people not to buy gift cards for people you don't know. I'd guess the same would apply for money transfers.

    WalMart does make an effort. People may question the efficacy of that effort but they are at least making the effort.

    1. Snake Silver badge

      Re: Blind or Won't See?

      "Every service counter and checkstand at our local WalMart has a prominently displayed notice telling people not to buy gift cards for people you don't know. I'd guess the same would apply for money transfers."

      That is true. However, compared that to a Western Union location which has signs plastered everywhere, including on the necessary forms, regarding possible fraud and to not send money unless you absolutely know the recipient.

      It seems like the FTC isn't happy with just one or two signs, which you do need to bother to read (and understand, as many money transfer users may not speak English). We'll have to wait and see how this plays out.

  2. Anonymous Coward
    Anonymous Coward

    Third party liability....

    I'm with Walmart on this. How is the transfer agent supposed to know the transfer is fraud? They only have minor details on individual transactions, and general appearance of the person sending the money.

    Why not create a blacklist that Walmart can filter transfers against.?... "here's a list of known scammer accounts and under section TBD of law TBD we require you block transfers to these accounts". Then you get due process protections too, appeals, challenges, compensation, costs etc. for all the times you make a false accusation. All those imagined fraud claims that are the fertile immagination of the counter staff.

    If you cannot create such a list that would pass muster, how are Walmart supposed to!??

    Likewise if FTC cannot define the process that determines if the transaction is fraudulant in any way that passes muster, how are they supposed to define it? What exactly is it that Walmart is supposed to do that says "this is fraud, and this is not"?? Does it involve skin color? How the person dresses? Caps? Sneakers? Weight? Height? What exactly?

    Likewise claiming they don't cap daily transfer limits sufficiently low (<$2500)... well define the fooking limit in law then, again Walmart is supposed to make the rules up themselves, they do that, and FTC wants different rules, but does not say what exactly or why exactly!

    If FTC defines a process that declares transfers fraudulant, Walmart could follow that, and FTC would be liable for all its failures. All its biases, all the times it causes problems with false positives, they are FTC's. Here they're trying to dump that on Walmart.

    1. Doctor Syntax Silver badge

      Re: Third party liability....

      It would also result in criminal prosecution in the event of the law being broken instead of these civil pay-to-settle proceedings which leave even the most guilty looking "defendants" the opportunity to claim they did nothing wrong after they've settled.

    2. lglethal Silver badge
      Go

      Re: Third party liability....

      I partially agree, but there are basic things that can be done to make fraud harder at these types of places, and which are done in other places around the world. Probably the bigger question is why these things are not in place already at a legal level, but if you want to cut down fraud at the likes of Walmart, Moneygram, and Western Union, you can easily do the following:

      - Only the person listed as the receiver, may collect the money (you'd be surprised how often this is not actually the case)

      - The person reciving the money has to show photo ID, matching the name of the listed receiver, and the person collecting it. This ID is scanned and kept by Walmart, etc.

      - A high definition photo of the person collecting the money is taken at the point of reciving the money.

      - The photo and ID are available to police upon receipt of a warrant on a fraud complaint case.

      Implement those points and suddenly the fraud will all but disappear, because people will not be happy about getting their face caught on camera, and their ID recorded when carrying out a scam.You might get a few mules caught who didnt actually realise they were involved in a scam, but then you can follow it up the chain.

      Where you might have problems is with people not having ID's. I've heard it can be hard to get relevant ID's in the US, anyone able to comment? If so, having something to show who a person is, plus the high def photo, should be enough to discourage most fraud criminals. No one wants there face on America's Most Wanted do they? ;)

      If Walmart havent implemented even that level of protections, then either a) they're negligent, or b) the law is negligent. Probably both...

      1. Doctor Syntax Silver badge

        Re: Third party liability....

        The US would have the ability to legislate for money being withdrawn in the US. However much the US may think otherwise it can't legislate for the rest of the world. Item 9 of the complaint says that money transfers also take place to "many other countries around the world, including, but not limited to, Mexico, Canada, the United Kingdom, Argentina, Guatemala, and Costa Rica." so the impact of such legislation would be limited.

        1. lglethal Silver badge
          Go

          Re: Third party liability....

          Yes, but such legislation already exists in a lot of other countries.

          But anyway, this comnplaint alleges people are taking money out in person at WalMart stores. Therefore these are not international transfers that are under investigation.

          Clean up your own backyard first...

  3. Dinanziame Silver badge

    Feels like a shakedown

    I assume this is a small fraction of the total transfers? There's not a lot that Walmart can do to stop it from happening.

    1. Anonymous Coward
      Anonymous Coward

      Re: Feels like a shakedown

      It's not that small of a fraction.

  4. DS999 Silver badge

    Maybe the FTC should concentrate on

    Finding a way to get bank accounts for the "unbanked".

    The reason those money transfer companies exist is because of all the people who don't have bank accounts, due to not being able to meet requirements or not being able to keep a sufficient balance and thus getting robbed by fees. If the banking laws were changed to prevent that sort of abuse, these money transfer companies wouldn't need to exist.

    Oh, and mandate that US banks have to be able to execute a transfer between accounts on the same day like most of the rest of the world can. It is ridiculous that when I transfer money to another account at a different bank - located in the same city - it takes two days for the money to be usable in the other account unless I execute the transfer before 9am. Despite doing this with regularity, so there isn't any "fraud" protection required like you might want if it was the first time. I'm sure people in Europe are reading this and scratching their hands wondering how that is possible in the supposedly high tech US. So am I.

    1. Pascal Monett Silver badge

      Re: Maybe the FTC should concentrate on

      Two days for a bank transfer ?

      Are they printing the transfer order and sending it by snail mail ?

      So that's why PayPal was invented, and why BitCoin and the rest of the funny-money schemes took off.

      You guys really have a shitty banking system.

      1. ecofeco Silver badge

        Re: Maybe the FTC should concentrate on

        America has a LOT of shitty thing. Banking is just a (big) part of it.

      2. John Brown (no body) Silver badge

        Re: Maybe the FTC should concentrate on

        "So that's why PayPal was invented, and why BitCoin and the rest of the funny-money schemes took off."

        There are lots of services that originate in the US and spread around the world, often due to "coolness" factors amongst the young, which actually, the rest of the world doesn't have so much of a need for, but it's because the "traditional" versions of the US services are entrenched in the past and the past while in the rest of the world, things have already moved on. This is probably why there are so many "disruptors" which originate there. For such a forward thinking and advanced country, the US can be remarkably staid in some areas.

        I suspect some of it is regulation/de-regulation and politics. Politicians of both sides will almost always scream about job losses if the party in power wants to make changes, even if, when they are in power, they want to make the same changes, with a minor tweak to make it "ours" not "theirs".

    2. Doctor Syntax Silver badge

      Re: Maybe the FTC should concentrate on

      I don't know what things are like in the US but you could add to the list of wants: a proper branch network.

      "We're closing branches because they're hardly used." - They're hardly used because it's a day's treck to find a branch that's still open.

      1. Stork Silver badge

        Re: Maybe the FTC should concentrate on

        Your needs may be different from mine: what do you need to go to a branch for? I have not been to my Danish bank for at least 10 years

    3. Stork Silver badge

      Re: Maybe the FTC should concentrate on

      Portugal (and I think Denmark too) has a legal requirement for banks to offer a simple account with debit card (cheques are rarely seen, and shops don’t have to accept them) for a low annual fee.

      It is partly to make sure everyone has access to banking, but limiting the black economy probably also comes into it.

    4. Anonymous Coward
      Anonymous Coward

      Re: Maybe the FTC should concentrate on

      "Finding a way to get bank accounts for the "unbanked"." it takes like 3 dollars and a good ID - why the ID to prevent fraud.

      "The reason" - perspective, not reality.

      " mandate that US banks have to be able to execute a transfer between accounts on the same day" this is for Fraud prevention, it has helped recover billions in stolen funds.

      If you want to know all the stuff banks have to do for fraud prevention, just ask at your bank. The regulations are in place due to learning from years of crime and scams. Not prefect, but neither is any currency system.

      I do infosec at a bank, there is much more to this than you are currently aware of, (like most people, we don't need to know) but if you want to know - there are no secrets, just ask your bank.

      .

      1. DS999 Silver badge

        Re: Maybe the FTC should concentrate on

        So why are there same day transfers in Europe? Are there no banking crime and scams there?

        1. Anonymous Coward
          Anonymous Coward

          Re: Maybe the FTC should concentrate on

          when people get scammed - tricked into taking money from their own account and depositing it another - those accounts they get transferred, forward the money to another account (repeat multiple times) if funds are held it allows investigators to prevent the full transaction at step one, if it stays in a US bank, it may even get clawed back after a couple days. But once it gets to another country that does not hold funds - it is gone, 99.99% likely for ever. So if you get bank scammed in the US and figure it out (or the bank does), there is a chance you can get your money back, if you get scammed in Europe (I suspect they have other tracking regulations, but I don't know) your money is likely gone forever the moment you make a deposit, with zero chance of seeing it again. If there is an EU bank tech here, maybe they can add more to this

          1. Falmari Silver badge

            Re: Maybe the FTC should concentrate on

            @AC “if funds are held it allows investigators to prevent the full transaction at step one”

            What investigators? Are you saying that every bank transfer between two US banks is investigated for 2 days before it is cleared? I don’t think so. Investigations start when an account is flagged for suspicious activity, normally a pattern of activity over a period of time not just a couple of days.

            In the UK I can transfer funds from my bank account to another UK bank 24/7. Normally the funds are in the other account in minutes and can be drawn on.

            Now to do that I have log into my bank. The transfer option requires me to select the account I want to transfer from and the name, sort code and account number I am transferring to. My bank verifies the information and tells me the bank and account name. If I ok that, I fill in the amount my password and hit the transfer button.

            Then I get a dialog asking me to confirm the transfer of said amount to that person at that bank on that account. If I ok the transfer, I must do the second part of the 2FA. Then within a few seconds I am normally told the transfer is successful.

            If the transfer is a large sum, then I get a message saying that the transfer cannot be authorised until my bank contacts me, normally by phone.

            Sure, after all that I still could have fallen for a scam. But if I ever do, I don’t think I will be thinking if only they held the money for 2 days, because I or the bank discovered the scam in under 2 days.

            1. DS999 Silver badge

              Re: Maybe the FTC should concentrate on

              Yep, I don't see why the US can't implement that if Europe and the UK seems to have no issues with it.

              I also don't understand why they randomly put a 'hold' on checks over a certain amount for a random number of days. When I've deposited "large" checks (which seems to be anything over $10K, but more often when over $25K) sometimes they will tell me they need to put a hold on it for two days. Sometimes for five days. Sometimes there's no hold at all. Even when I get checks FROM THE SAME ACCOUNT whether there is a hold or not or its length varies.

              It is frustrating as hell because you can't plan for shit, other than assuming a worst case of a week long hold. Though I don't even know that I've hit the worst case hold I guess.

              I get that checks are inherently riskier than transfers, since I've already set up the transfers (didn't mention that to the UK folks, I've already provided the routing & account number of the bank I'm transferring to in the past, and verified it by telling them the amount of some tiny random transfers they made so they can verify I own the other account, and made dozens of successful transfers between them in the past few years, but despite that it STILL takes two days!) With a check you could get hold of one and forge the signature, or make a fake check if you have the account & routing number (which you can get off a real check for a smaller amount, or that was written to someone else)

              So I can almost understand it for checks, but how is that today for instance when I deposited a check from a source I've never got a check before for $31K and the funds were available instantly (because for some reason I won the "check hold" lottery today I guess) but there is always a two day delay for transfers between two accounts I own and have proven in the past I own and made many previous transfers? That makes zero sense. Why isn't there a "bank transfer lottery" I can occasionally win too?

              Fraud/security is just an excuse for banks not wanting to spent money to update antiquated systems and wanting to steal the interest from two days in limbo.

              1. Anonymous Coward
                Anonymous Coward

                Re: Maybe the FTC should concentrate on

                Dude, Talk to your bank - there are no secrets. If you want to understand - ask them, you pay them, they will answer your questions. but here to make this one simple for you - you and said company both use the same bank, they have a consistent pattern of paying out $x to people. Your bank does what it does, there are Fed and state regulations and there are company policies - just ask "your" bank "your' questions.

            2. Anonymous Coward
              Anonymous Coward

              Re: Maybe the FTC should concentrate on

              "Are you saying that every bank transfer between two US banks is investigated" - Nope. that would be insane.

              Accounts get flagged for any specific activity (huge amount of automation, and eyes to review)

              FYI - these holds are for large sums, not petty (under 3k) transfers.

              BUT I am not the banker, just IT. like I said talk to your bank if you have questions.

              1. Falmari Silver badge

                Re: Maybe the FTC should concentrate on

                @AC “FYI - these holds are for large sums, not petty (under 3k) transfers.”

                3k that’s a pretty low bar I have bought a car just on my bank card for way more than that, cleared with a phone call from my bank while I was in the dealership.

                Did a transfer for over £17k for a computer beginning of the year again had to speak to my bank within an hour of speaking to the bank the company I was buying from phoned to tell me the transfer had cleared.

      2. Doctor Syntax Silver badge

        Re: Maybe the FTC should concentrate on

        "this is for Fraud prevention, it has helped recover billions in stolen funds."

        The fact that the banks will be earning interest on the substantial amounts in transit at any one time is just a coincidence, then?

        1. Anonymous Coward
          Anonymous Coward

          Re: Maybe the FTC should concentrate on

          substantial? please explain. If you don't like a sandwich at Joe's Subs, don't buy there, if you have a bank that charges fees you don't like, use another bank. If you don't like using a bank or CU. You can always keep it at home :) it's your money, your choice.

          Why do banks earn money - to pay me :) and the other people that work there.

          Check out your local Credit Union, they can be a good alternative to banks, and most often are heavily invested in their local community.

          1. Richard 12 Silver badge

            Re: Maybe the FTC should concentrate on

            $6,498,000,000 is quite a substantial amount to get 2 days of interest on every year.

            (Source: World Bank)

            And no, there is no choice. It's a failed market.

            Before "Faster Payments" all the banks and building societies in the UK took 2-4 days to do an interbank transfer. Within 6 months, the vast majority took under an hour.

            So it wasn't a technical issue.

            1. Anonymous Coward
              Anonymous Coward

              Re: Maybe the FTC should concentrate on

              relax, you don't "have to" use a bank, your choice.

              1. John Brown (no body) Silver badge

                Re: Maybe the FTC should concentrate on

                But when the choice is delayed payments or don't use a bank at all, that's not really a choice. Clearly people in the US are demanding a better banking service. Why is the world capital of Capitalism not cashing in on that demand and offering the service people want?

      3. Richard 12 Silver badge

        Re: Maybe the FTC should concentrate on

        Transfers between most bank accounts within the UK take under two hours.

        Usually, it's within 30 seconds.

        In the UK the upper limit for Faster Payments is £250,000, which covers basically everything except buying a house.

        Not sure about within EU, but I believe it's similar.

        UK to/from EU takes much longer.

        1. Falmari Silver badge

          Re: Maybe the FTC should concentrate on

          @Richard 12 “Usually, it's within 30 seconds.”

          That’s what I have found when I choose the immediate option which says within 2 hours. I have been talking on the phone to the person I am transferring funds to. Send the transfer and while telling them it can take up to 2 hours, they tell me it has arrived. Has happened lots of times.

        2. DS999 Silver badge

          Re: Maybe the FTC should concentrate on

          I haven't even ever tried to do a bank transfer outside of the US so I have no idea how long it would take.

          I find it amusing that there is plenty of proof transfers can happen right away, yet we have some bank shill "who works in IT" telling us that's just how things have to be in the US (for reasons he won't say, but will only tell me to ask my local bank about) and we should accept it as the way things are and not expect it to ever change.

          1. Falmari Silver badge

            Re: Maybe the FTC should concentrate on

            @DS999 “telling us that's just how things have to be in the US”

            How do you do business in the states?

            Here’s is an example of how it works for me in the UK. Purchase a new motorcycle go into the dealer put down a deposit with the bankcard. When the bike is ready go back pay the rest (£10k or more) on the bankcard. The bank will phone for conformation, by the time I have finished all the paperwork the monies will have cleared and I can leave with the bike.

            But I have found you can phone the bank before you go to the dealer informing them you will be making this purchase and then no conformation phone call is required.

            In the days when we used cheques I would have had to get a bankers draft from the bank to do that as a cheque would require 3 working days to clear.

            1. DS999 Silver badge

              Re: Maybe the FTC should concentrate on

              I use a credit card for most things, but it would be mostly the same except for things too big (over $20-25K) I'd still have to write a check. Though give the ~2% interchange fee some places would probably rather not people buy a really expensive item with a credit or debit card.

              I wrote a $40K personal check for the last car I bought and they let me drive it off the lot. I assume it took a few days for the check to clear, but they had a copy of my driver's license so they could send the cops after me if it turned out I'd written them a bad check lol

              1. John Brown (no body) Silver badge

                Re: Maybe the FTC should concentrate on

                "Though give the ~2% interchange fee some places would probably rather not people buy a really expensive item with a credit or debit card."

                I'm not sure of the precise rules, but here in the UK, yes there's a percentage fee for using a credit card, but I think the fee for using a debit card is something like 5p or 10p, ie it's purely a tiny fee for carrying out the transfer of cash from one account to he other. The credit card is much higher because it's basically organising a loan to the card user and putting a significant portion of the loan risk on the card issuer.

              2. Falmari Silver badge

                Re: Maybe the FTC should concentrate on

                I tend to use credit card* most of the time but when it comes to motorcycle and car dealerships in the UK they don't accept them for vehicle purchase tried a few times. Probably because of the % cut the card company take as well as the purchase protection credit cards give in the UK.

                * Cleared end of each month

            2. Stork Silver badge

              Re: Maybe the FTC should concentrate on

              We rented out tourist accommodation until a couple of years ago. Most payments by wire transfers in the range €500-4000 and from elsewhere in the Eurozone. Vast majority were available the following banking day.

      4. Anonymous Coward
        Anonymous Coward

        Re: Maybe the FTC should concentrate on

        Interesting that you think the only reason people might be unbanked is "lack of $3 and an ID". I put it to you that you don't pay much attention to the problem.

  5. sitta_europea

    Quoting the document filed in the case:

    "... For example, for years, it was Walmart’s policy or practice not to deny payouts to suspected fraudsters at its stores, but instead to have its employees complete those transactions. Even after it became illegal in June 2016 for cash-to-cash money transfers to be used to pay for telemarketing transactions, Walmart failed to take appropriate steps to prevent those types of transfers at its locations. As a result of Walmart’s failure to take appropriate steps to mitigate the problem, consumers have lost substantial sums to frauds through money transfers effected at Walmart. ..."

    On the face of it there seems at the very least to be a case against Walmart.

    If I were running the show, and my staff were knowingly handing money to suspected fraudsters, I'd expect to be accountable to law enforcement. It doesn't matter if the suspected fraudsters were in fact fraudsters or not; what matters is the suspicion and the knowing.

    And, of course, the making of money by the doing of it.

    If Walmart's policy was indeed not to deny payouts to suspected fraudsters then it seems to me that there's a can to be carried.

    I have a friend who paid £700 to a fraudster via Western Union. My friend could not afford to lose that money and I was glad when Western Union had to pay some small token in acknowledgement of its complicity in that and literally millions of other frauds.

    I didn't know that Walmart did the same sort of thing, and I'm a bit horrified that it could have gone on for so long before the FTC did something about it.

    1. Doctor Syntax Silver badge

      "suspected fraudsters"

      Who's doing the suspecting here and on what prima facie evidence? If you have, legitimately, had money transferred to you are you going to be happy if a PFY behind the counter suspects you're a fraudster?

      It puts the counter staff in an invidious position.

      1. John Brown (no body) Silver badge

        Does it? Is it hard to ask for ID so you can at least forward that information to Walmart security or the Police to then investigate? If you're buying beer, you need to show ID, so why not when collecting money?

  6. Anonymous Coward
    Anonymous Coward

    Teach your parents well

    First rule of Gift Cards is to NEVER buy Gift Cards.

    Not for anyone, ever.

    Starve the GC market out of existence.

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