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Walmart says that the Federal Trade Commission’s lawsuit against the corporation is “an egregious instance of agency overreach” and is arguing the case should be dismissed. 

In a court filing on Monday, the largest company in America defended itself against the FTC’s claims that Walmart allegedly “turned a blind eye” to scammers taking advantage of money-lending services like MoneyGram that are available at its stores to “fleece” Walmart customers. In a step rarely taken by corporate entities in such legal battles, Walmart also challenged the constitutionality of the agency’s legal actions. Some legal experts say the case could advance to the Supreme Court.

Lina Khan, Commissioner of the Federal Trade Commission, speaks at a Senate Committee on Commerce, Science, and Transportation confirmation hearing on Capitol Hill on April 21, 2021 in Washington, D.C. Khan is an associate professor at Columbia Law School.

Lina Khan, Commissioner of the Federal Trade Commission, speaks at a Senate Committee on Commerce, Science, and Transportation confirmation hearing on Capitol Hill on April 21, 2021 in Washington, D.C. Khan is an associate professor at Columbia Law School. (Photo by Saul Loeb-Pool/Getty Images)

“The FTC’s lawsuit is an egregious instance of agency overreach,” the company said in a corporate statement. “The FTC is trying to hold Walmart liable for the criminal actions of completely unrelated third-party fraudsters, in spite of Walmart’s extensive efforts to prevent those very fraudsters from defrauding our customers, and despite the FTC’s lack of constitutional or statutory authority to bring the lawsuit. Walmart is now—and always has been—dedicated to its customers and shares the FTC’s goal of protecting customers from fraudsters.” 

The FTC is bringing the suit despite the Justice Department declining to represent the agency and despite the dissent of two FTC commissioners, according to Walmart. “The skepticism about the FTC’s case is well-founded,” the company claims, and says that FTC’s arguments rely on “expansive legal theories” that conflict with “clear constitutional and statutory limits on its authority.”

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In their brief, Walmart explains that over a decade ago the company began to offer money-transfer services to its customers as “a convenient, affordable way for customers to send and receive money to and from family, friends, and others.” The company also claims they implemented a “host of anti-fraud measures” since offering the money services to their customers. As a result, they say, “out of nearly 200 million money-transfer transactions processed at U.S. Walmart stores between 2015 and 2020, only a tiny fraction—less than 0.08%—were even reportedly the product of fraud…”

“The FTC has no authority to act as a freewheeling compliance auditor or inspector general, ‘micromanaging’ the details of Walmart’s anti-fraud program ‘in accordance with [its] wishes’,” Walmart states in its brief.  “Rather, the FTC’s authority is limited by the Constitution, by the FTC Act, and by its own regulations. None of those sources supports the FTC’s claims. The case should be dismissed.”

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James Cooper, law professor at the Scalia Law School and former deputy director of FTC’s Bureau of Consumer Protection told Fox News Digital that the current legal environment for the FTC is problematic, with several cases looming in lower courts dealing with similar overreach issues, and one to be argued at the Supreme Court this fall, Axon v. FTC. He described the Walmart case as “chum in the water” for a judge to potentially address constitutional limitations on the agency. 

The FTC in recent years, particularly under the leadership of Biden-appointed Lina Khan, has encountered mounting criticism for its reported misuse of regulatory power. Most recently, it was widely reported that Kahn overruled FTC staff in her decision to pursue an anti-trust case against Meta for expanding its virtual reality business. The Wall Street Journal editorial board described Kahn’s legal theory to block the Meta acquisition as “discredited.”

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A former Justice Department official told Fox News Digital, “The FTC has been flirting with constitutional overreach for several years and it has hit turbo boost for the past two years.  They could well be reined in by the Supreme Court later this year in the Axon case, especially if the Court is wise enough to expand the issues before it to the broader issue of the FTC’s constitutionality.”

A conservative lobbying group, Heritage Action, said in a statement that Walmart should be “applauded for defending itself and for advancing important separation of powers issues.” 

An FTC spokesperson told Fox News Digital the FTC will be filing its opposition to the motion on October 5 and provided no further comment.

Brianna Herlihy is a politics writer for Fox News Digital. Story tips can be sent to [email protected].

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