Walmart Urges Court to Again Dismiss FTC’s TSR Claims on Bad Money Transfers

Walmart takes fraud against its customers seriously, “and for years has implemented a robust anti-fraud program designed to defeat the various scams the FTC identifies in its complaint,” said Walmart’s reply Monday (docket 1:22-cv-03372) in U.S. District Court for Northern Illinois in Chicago in support of its Aug. 11 motion to dismiss the commission’s June 30 first amended complaint for failure to state a claim (see 2308140007). The FTC alleges Walmart continued to process fraud-induced money transfers at its stores and failed to do enough to warn consumers of the risks and help them make informed choices. But the results of Walmart’s anti-fraud initiatives “are impressive,” said the retailer’s reply. The FTC doesn’t dispute that the vast majority of money transfers -- more than 99.9% overall -- “are legitimate,” it said. “This case involves the tiny fraction of transfers in which third-party criminals trick customers into using Walmart’s service to send them money,” it said. When those “isolated instances” of criminal activity “unfortunately occur,” Walmart “routinely partners with law enforcement to protect its customers and bring fraudsters to justice,” it said. The FTC nevertheless “is set on blaming Walmart for the criminal misconduct of others,” it said. But the agency’s Telemarketing Sales Rule isn’t “an all-purpose tool that can be wielded against companies offering legitimate services to the public, just because a small number of bad actors sometimes use those services to commit crimes,” it said. TSR liability is “carefully limited” to entities that knowingly provide substantial assistance to sellers or telemarketers that defy the law, it said. The court “rightly said the FTC’s initial complaint failed to satisfy any of these essential requirements,” it said. The FTC’s Sept. 15 opposition brief to Walmart’s motion to dismiss (see 2309180033) “confirms that nothing has changed” since the agency’s original complaint, said Walmart’s reply. Its new complaint “still fails to allege that Walmart’s provision of everyday money-transfer services amounts to substantial assistance” of fraudsters, it said. The FTC also doesn’t allege that Walmart “knew the transactions at issue were illegal,” it said. The commission doesn’t even “properly allege” the alleged scams qualify as telemarketing under the “governing regulatory definitions,” it said. For all these reasons, the FTC’s TSR claims “should again be dismissed, this time with prejudice,” it said.