Walmart in Trouble Again As Virginia Man’s 5-Year-Long $7 Million Gift Card Scam Is Uncovered
In a recent investigation by ProPublica, it was revealed that a man in Virginia orchestrated a scheme involving $7 million in fraudulently obtained Walmart gift cards. Over five years, he scammed numerous victims like Christy Browne who received a call from someone claiming to be from the FBI.
Felt like a panic call
The caller using tactics to create panic informed Browne that her Social Security number was in the hands of drug traffickers who were laundering money. The caller insisted that the FBI needed money to catch the criminals and advised Browne not to contact local law enforcement.
Feeling trapped, Browne, a retired teacher from upstate New York, followed the caller's instructions. She purchased four $500 Walmart gift cards, photographed the serial numbers and PINs, and sent them to the supposed FBI agent. This allowed the fraudster to access $2,000 from Browne's cards. The scheme continued as the gift card numbers were sold to Qinbin Chen, a Chinese national residing in Virginia.
Chen, in turn, handed the numbers to an accomplice near a Walmart in Sterling, Virginia. The accomplice used one gift card to purchase another just eight minutes later. By buying Apple, Google Play, and other gift cards at the self-checkout kiosk, he made it challenging for Walmart to trace where the funds went. Chen then sold these cards to a buyer in China, effectively making it impossible for Browne to recover her lost $2,000.
Walmart's $7 million scheme fraud
Born in Fujian province, China, Chen arrived in the US in 2014. He worked in restaurants until he discovered a new income source in 2016—gift cards. This marked the beginning of his involvement in fraudulent schemes involving gift cards. Qinbin Chen orchestrated a five-year international scheme involving $7 million in fraudulently obtained Walmart gift cards, impacting hundreds of victims and co-conspirators in the U.S. and China.
Exploiting Walmart's weak systems
Scammers exploited Walmart's lax systems, leading to over $1 billion in fraud losses between 2013 and 2022, involving both Walmart gift cards and electronic money transfers. Walmart's financial gains from gift card use and money transfers, prioritizing profits over fraud prevention, contributed to over $27 billion in swindled funds from Americans. Walmart faced repeated government scrutiny, including investigations by the Attorney General and a 2022 FTC lawsuit, alleging the company turned a blind eye to criminal activities.
Despite legal challenges, Walmart continues to expand its financial services market share, acquiring the online banking platform One in 2022. Doubts linger about Walmart's ability to effectively manage a sprawling financial business, given past failings, inadequate training, and a reluctance to take responsibility for fraud.
Walmart's defense and legal standpoint
While Walmart defends its anti-fraud efforts, legal filings emphasize limited responsibility for third-party criminal conduct, asserting consumers can reasonably avoid fraud schemes. Chen exploited Walmart's weaknesses leading to the largest gift card laundering scheme prosecuted by U.S. law enforcement with at least 28 defendants convicted of transferring millions through Walmart. Facing increasing competition, Chen's operation encountered other scammers at Walmart's self-checkout counters, highlighting the pervasive nature of gift card schemes and their impact on the U.S. retirement funds.
Deceptive atmosphere
Store #2038 in Sterling, Virginia, seems like any other Walmart, complete with a giant U.S. flag, the familiar yellow "spark" logo, and a busy parking lot. Despite its common appearance, this Walmart became a hotspot for fraud orchestrated by Chen's crew, blending in with everyday shoppers. Inside, shoppers find financial promotions, including unattended kiosks with hundreds of gift cards and a money services desk promoting Walmart's banking app for check cashing, bill payments, and international money transfers. The store's unsuspecting atmosphere masked the fraudulent activities carried out by Chen's crew who took advantage of the retail setting.
