"A Facilitator of Fraud on a Mass Scale"
It's Walmart. Plus, debt and the courts
ProPublica has a story about how Walmart’s financial services are magnets for fraud. And about how Walmart isn’t doing much about it.
America’s largest retailer has long been a facilitator of fraud on a mass scale, a ProPublica investigation has found. For roughly a decade, Walmart has resisted tougher enforcement while breaking promises to regulators and skimping on employee training, according to more than 50 interviews, internal documents supplied by former industry executives, court filings and other public records.
Why isn’t Walmart doing more to stop fraud using its gift cards and financial services products?
Too often, Walmart has failed. More than $1 billion in fraud losses were routed through the company’s financial systems between 2013 and 2022, according to filings by the Federal Trade Commission and court cases analyzed by ProPublica.
Walmart has a financial incentive to avoid cracking down. It makes money each time a Walmart gift card is used and earns a fee when another brand of card is bought. And it receives one commission when a person sends a money transfer and a second when the recipient picks it up. The company’s financial services business generates hundreds of millions in annual profits. (Its filings do not provide specific figures for gift cards and money transfers.)
Debt Collection and the Courts: A Tennessee Case Study
The Sycamore Institute has a new study of debt and the court system. The study dives into debt collection cases in courts in Davidson and Shelby counties.
Turns out, payday lenders are among the creditors most likely to file suit against a borrower:
A few companies file most debt collection cases in Davidson County – mostly high-interest lenders and debt buyers (Figure 7). Between January 2016 and March 2023, Advance Financial, a Tennessee-based high-interest lender, filed over 17% of cases. In 2022, Speedy Cash, another high-interest lender, overtook Advance Financial in filings — accounting for 13% of all debt collection lawsuits. In both time periods, just seven plaintiffs accounted for about half of all debt collection lawsuits.
High-Interest Lenders include creditors that offer short-term, high-cost loans often to consumers with poor credit. According to estimates, interest and fees on these types of loans can add up to a nearly 500% annual percentage rate in Tennessee, on average.