Multinational retail giant Walmart Inc. (NYSE: WMT) recently revealed that it has been sued by the Federal Trade Commission (FTC) for allegdely facilitating fraudulent activities through its money-transfer services.
Shares of the company declined 1.4% to close at $122.37 on Tuesday.
The FTC filed its complaint in the U.S. District Court for the Northern District of Illinois. It accused Walmart of using its money-transfer service to facilitate scams, which included fake IRS officers requesting money from the public.
The FTC further alleged that between 2013 and 2018, over $197 million sent or received by Walmart were the subject of fraud complaints. The FTC said that the company was aware of the same but did not do anything about it.
Continuing its allegations against the company, the FTC said that Walmart previously allowed employees to issue money-transfer payouts without training. Although the training started in May 2017, it was restricted to select locations.
In a statement, the FTC said, “The company did not properly train its employees, failed to warn customers, and used procedures that allowed fraudsters to cash out at its stores.”
Responding to the allegations, Walmart said that the suit was “factually misguided and legally flawed.”
The company added that the FTC denied it the due process of hearing. It said the FTC’s investigation took place while the government agency was already pursuing one of the companies that Walmart works with to offer money-transfer services.
Recently, Goldman Sachs analyst Kate McShane reiterated a Buy rating on the stock. The analyst, however, lowered the price target from $160 to $138, which implies upside potential of 12.8% from current levels.
Consensus among analysts is a Strong Buy based on 22 Buys and five Holds. WMT’s average price target of $156.11 implies upside potential of 27.2% from current levels. Shares have declined 9.5% over the past year.
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on WMT, as 13.8% of top portfolios tracked by TipRanks increased their exposure to WMT stock over the past 30 days.
In response to the FTC suit, the company came out with a strong response that it would stoutly defend its anti-fraud efforts and stated the efficacy of its money-transfer services, which helped numerous customers save about $6 billion in money transfer fees.
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