An in-depth investigation by ProPublica says that Walmart Inc. (NYSE: WMT) is a significant enabler in a vast fraud network involving gift cards and money laundering.
One notable case involved Christy Browne, a retired teacher from New York, who was tricked into buying $2,000 in Walmart gift cards in February 2020.
She was led to believe she was aiding an FBI investigation into money laundering. The outlet reported that these cards were, in fact, funneled into a complex laundering scheme orchestrated by Qinbin Chen, a Chinese national based in Virginia.
Chen’s operation, responsible for laundering approximately $7 million in fraudulently obtained gift cards, spanned across the U.S. and China, victimizing hundreds.
This scheme, dubbed “The Walmart scheme,” underscores Walmart’s history as a hotspot for fraud. Despite commitments to regulators and enforcement efforts, Walmart has been a channel for over $1 billion in fraud losses from 2013 to 2022, per the Federal Trade Commission (FTC).
Walmart’s financial services, particularly gift cards and electronic money transfers, have been consistently exploited by scammers.
The company’s lack of stringent employee training and failure to implement anti-fraud measures have significantly contributed to these losses, according to ProPublica.
In 2022, the FTC filed a lawsuit against Walmart, alleging that the company “turned a blind eye” to criminals using its financial systems.
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“Walmart knew that its services were used by fraudsters and that the company was repeatedly warned about certain stores where “twenty-five, fifty, or even seventy-five percent of money transfer activity was fraudulent,” a federal judge in the case wrote in an order.
The company is aiming to have the lawsuit dismissed, citing, in part, that it bears “no responsibility to guard against the criminal conduct of third parties.”
Despite acknowledging the unfortunate nature of fraud, Walmart has argued that such schemes are “reasonably avoidable by consumers.”
Additionally, the company contends that the FTC is overstepping its authority by initiating the action.
According to ProPublica, Chen engaged in laundering Walmart gift cards for five years until his arrest in…
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