Photo:
Charles Krupa/Associated Press
Federal Trade Commission Chair
Lina Khan
has been smacking around businesses, but last week
swung back hard against an abusive lawsuit by challenging the agency’s enforcement power. This one could be fun—and legally significant.
Ms. Khan last year declared that she wants to use her power to shape “the distribution of power” in the economy, and she seems to mean by any means necessary. The FTC’s lawsuit against Walmart in June is a case in point.
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The FTC claims Walmart aided and abetted con artists who swindled its customers. That’s a weighty accusation, but the agency’s evidence is paper thin. The FTC doesn’t show any wrongdoing by Walmart. It argues instead that the company turned a “blind eye” by processing money transfers at the request of customers who had been scammed.
Blind eye? Walmart operated numerous anti-fraud programs including requiring customers to show government-issued photo identification and posting warnings about scams. Yet the FTC claims Walmart should have done more to stop the less than estimated 0.08% of payments that customers unknowingly sent to scammers via its money-transfer services.
The lawsuit is especially rich coming after the U.S. was bilked out of hundreds of billions of dollars in pandemic relief. The FTC complaint is a corollary to the Justice Department’s dubious lawsuit against Walmart for fulfilling fraudulent opioid prescriptions, which is pending in federal court. In both cases Walmart didn’t knowingly commit any wrongdoing.
Yet the FTC claims Walmart violated Section 5 of the FTC Act prohibiting unfair trade practices as well as the agency’s Telemarketing Sales Rule against inducing money-transfer payments. The agency says Walmart’s mere awareness that some customers might be conned makes it liable for damages.
Walmart’s motion to dismiss the lawsuit dismantles the FTC’s…
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