FTC Charges Retail Corporation with Failing to Protect Consumers from Fraud Scams

The FTC charged a retail corporation with failing to take appropriate and effective measures in a timely fashion to detect and prevent fraud in the processing of money transfers sent and received by consumers at store locations.

In a complaint filed in the Northern District of Illinois, the FTC alleged that the company was aware of fraudulent money transfers using its wire services but continued to allow these transfers to occur, costing consumers hundreds of millions of dollars. Additionally, the FTC alleged that the company maintained a policy that prohibited staff from denying payouts to suspected fraudsters at its stores and instead required employees to complete those transactions. Further, following the passage of a law that made cash-to-cash money transfers used to pay for telemarketing transactions illegal, the company allegedly continued to process those transactions.

The FTC alleged that the corporation failed to (i) train those employees responsible for detecting and preventing money transfer fraud at its locations, (ii) adequately monitor and investigate money transfer activity, and (iii) implement comprehensive anti-fraud policies or properly warn consumers of the risks of fraud-induced money transfers. The complaint also alleges that the company received numerous complaints, but continued to ignored the issue even after independent audits documented deficiencies in the anti-fraud programs of the money transfer services.

The company was charged with violating Section 5 of the FTC Act ("Unfair methods of competition unlawful; prevention by Commission") and FTC Rule 310.3 ("Deceptive telemarketing acts or practices").

The FTC is seeking (i) a permanent injunction, (ii) civil penalties and (iii) necessary relief to consumers who have been affected.