Power Lunch - CNBC Special Report: How Walmart Marketplace’s Rapid Growth Came With Fakes And Scams 9/19/25

Episode Date: September 19, 2025

In its race to rival Amazon and become the next great “everything store,” Walmart leveraged its brick and mortar empire to grow into a major player online. And it didn’t take long for the world���s biggest retailer to build a massive digital marketplace with hundreds of millions of products and thousands of third-party sellers. But Walmart’s digital boom has a little known and much darker underside – where some sellers steal the identities of legitimate businesses so they can peddle counterfeit and sometimes dangerous products to unsuspecting customers. After CNBC shared its reporting with Walmart, the company began tightening its vetting process for both products and sellers and says it has a “zero-tolerance policy for prohibited or noncompliant products.” Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Just down the street from Chicago's iconic Wrigley Field is Demos Pizza, known for serving up slices to hungry baseball fans. Its menu has classics like pepperoni pies to creative combos like chicken and waffles. What's not on the menu? Luxury Beauty Products. But here's Demos pizza selling Lancombe face cream on Walmart's online marketplace for just $25.99. A 91% discount.

from its typical retail price of $280. Just to be clear, you don't have a side hustle selling beauty products in Walmart.com, right? I do not, no. We, yeah, we just make pizza here. And so if someone comes in and asks for double pepperoni, that's not like a code word for a knockoff beauty product. No. Dimitri Circa Nicolao, the restaurant's owner, was startled when we told him there was a third party seller on Walmart.com using his business credentials to sell Lancombe beauty cream. And to make matters worse, lab testing confirmed the cream was counterfeit.

Consumer buying high-end beauty products from Demos pizza. I mean, does that make sense to you? No, it seems ludicrous. We spent 16-plus years building the reputation here in Chicago and to know that somebody could just take our name and sell whatever they would like on Walmart's website, where we have no control, doesn't feel good. And Demos isn't alone. During our investigation into Walmart's marketplace, we identified at least 43 instances,

including demos, where a business's name and address were stolen to create a third-party seller account, from a New York grocery chain to publicly traded companies. Take this Walmart seller account fraudulently posing as Thermo Fisher Scientific, one of the world's leading biotechnology companies. Instead of selling the lab products you'd expect, like beakers and pipettes, its Walmart seller page featured numerous beauty products, often at steep discounts. So this is the order of confirmation that I received when I purchased the Soldagenero Hair and Body Mist from the seller purporting to be Thermo Fisher Scientific Inc.

I paid $14 for the product. It typically retails for about $25, so this is a 44% discount. Like many third-party listings we analyzed, it looked highly rated, at least at first glance. So you have the ability to filter by verified purchases only on these reviews. And when you click that, it goes from 2,300 reviews to 388. So it's a huge drop-off. And verified purchases only are what Walmart knows for sure is a review from somebody who actually bought the item. So out of 388 reviews, let's look at one.

one-star ratings. 209 of them are one-star ratings. Most of those reviews are calling out the item as fake or counterfeit. Thermo Fisher told us it does not have a Walmart seller account. Its business name and address were stolen. And lab testing conducted by St. John's University confirmed the sold to genera product was counterfeit.

Walmart declined an on-camera interview, but in a statement wrote, trust and safety are not unnegotiable and that it has a zero tolerance policy for prohibited or non-compliant products. It told us complaints are flagged, reviewed, and action taken as appropriate. Walmart also said it's investing in new tools and technologies to keep counterfeits off the platform. Walmart said it could share more details about its robust vetting processes, but only on the condition that we would not report it publicly because it could compromise the integrity of our trust and safety systems. We declined to accept information we could not report.

Our investigation focused on fraudulent third-party sellers offering health and beauty products, ones that experts say pose the greatest risk to consumers because we put them in and on our bodies. As part of our reporting, we tested items sold by third-party sellers that had stolen the identity of a real business to see if the products they were offering were fake. We purchased items to test, they were all highly rated, deeply discounted beauty products from third-party sellers confirmed to have stolen the identity of a legitimate business. 14 additional items we tested were purchased by Walmart customers and returned to a legitimate business that says a third-party seller stole its identity. These items were later provided

to us. And testing by the brands or lab testing by St. John's University confirmed all of these items were fake. Of course, these items are just a sample of the hundreds of millions of goods sold on the platform. To understand how imposter selling counterfeits make it onto the platform, we spoke with more than a dozen current and former Walmart employees about the company's vetting process. Tammy Jones was one of those employees. She said she worked out Walmart Marketplace from November 2021 and left in April 24 for personal reasons, including health, issues and family matters that made it difficult to maintain the hours needed to keep her benefits. While she was at the company, she joined Walmart's Trust and Safety Team in September

2023, where she said she was tasked with reviewing seller applications that failed the initial automated process. When she first took the role, she said the requirements to join the marketplace were strict. Initially, we were told that we had to go through certain steps to make sure that We vetted the application to review all of the documentation to verify the telephone numbers, the EIN, business address, the type of products, and the person themselves that's applying. But over time, Jones said there was pressure for management to approve more sellers. Why was Walmart so inclined to get so many sellers onto the platform? They wanted to get all of the business.

They wanted to take away from other companies that are doing basically the same thing to be able to beat the competition. And who were they competing against? Amazon. When we had our weekly meetings, we were told we have sellers that are leaving Amazon because Amazon is more strict. You all are more lenient. So I'm going to take my products from there and bring it over to Walmart.

Much of Walmart's online growth started in 2021 as the company made the marketplace a strategic focus, according to public comments Walmart has made. Around the same time, Amazon began tightening some of its rules, and these stricter policies pushed some sellers to seek alternatives, and Walmart, looking to expand, made it easier for them to get in the door, according to sellers, experts, and current and former Walmart employees. To see how Walmart seller vetting compares to Amazon's, we reviewed their application requirements. Amazon requires a video interview or a picture of the seller with their government-issued

ID, a business registration number, and proof of address. A video interview is not listed as a requirement to join Walmart's marketplace. Walmart previously required sellers to submit a W-9 in an IRS-issued EIN document, forms that verify a business's federal tax ID to submit their application. But a YouTube video uploaded in March by an independent account that shows the onboarding process indicates that Walmart made EIN documentation optional. At the time, the only documents U.S.-based sellers were required to submit were a passport or driver's license. After we contacted Walmart, it told us U.S.-based sellers are required to upload their IRS-issued EIN forms during the application process.

When pressed on our reporting that found the forms were optional, Walmart said it initially verifies EINs through government and third-party systems. If things don't check out, sellers are then asked to submit additional. documentation. If they don't, Walmart said they aren't permitted to sell on Walmart marketplace. Also, in a news release, Walmart published the day before our reporting deadline, it wrote it has zero tolerance for bad actors and has rapid response capabilities enabling our trust and safety team to investigate and address violations quickly. Other former employees, some of whom asked to remain anonymous because they signed confidentiality agreements, agreements told us that prior to the COVID pandemic,

Walmart Marketplace closely monitored third party sellers and products. But over time, some said it became clear. Strict policies could be a barrier to growth. They would look at us and say, well, why is this application still on hold in your queue? Well, I'm still waiting on documentation from the seller. Well, let me review that application.

They would review it. No, let's just go ahead and approve it. And I know well that it should not have been approved. Was that a red flag to you? It was. It was a red flag for me because I wasn't sure if something that I'm approving to be pushed through was going to be a product that could potentially harm someone or if it was a product that was fake. Take what Mary May says happened to her. How long have you been a Walmart customer? The majority of my life. I'm going on 60s, so, you know, half a century.

And what about Walmart.com? It's Marketplace. How long have you been shopping there? Since I was able to since they started selling online. For May, who lives in rural Tennessee, the emergence of online shopping and delivery was a huge convenience since her closest major grocery store, Walmart, is at least 30 minutes away. I live out in the middle of nothing. I couldn't believe that I could just place an order online and have groceries delivered this far out. Low prices are what enticed her to buy Immuno-150 and Nariva Brain Supplements on Walmart.com for herself and her family. So you bought several bottles of each of these supplements.

Yes, that was a bargain. It was significantly, significantly less than the regular price. But when the supplements arrived, May says the bottles looked different from one she previously purchased directly from the companies. And notice the word beneficial was misspelled. So she called the manufacturer. What did they tell you? They told me that it was counterfeit and that it might have things. such as talcum powder or baking soda in it,

and that it could be hazardous to my health to take it and not to use them. She said she then returned the items and received a full refund from Walmart. May purchased some of the Nareva supplements from a third-party seller on the site, and we confirmed the seller had stolen the name and address of a legitimate business.

We also had some of the Noreva supplements may purchase tested by its maker, Reck it, which confirmed they were counterfeit. Reckett told us it encourages anyone who suspects they bought a counterfeit item to discontinue use and contact its customer care team. And a general statement about its policies, Walmart wrote, if a customer isn't satisfied for any reason,

our return policy is designed to make things right quickly and easily. When I purchase something that I'm going to ingest, and the product in the bottle is not, what's purported to be on the label, that's dangerous. I thought that even if it were only for self-preservation, they would care if they sold me something that could be harmful. I don't feel that way anymore, so I don't trust them. Trust is everything.

Bob Barcazy is the president of the International Anti-C counterfeiting Coalition, or IACC, a nonprofit that fights counterfeiting and warns that fake goods can pose serious health and safety risks. If you look at Walmart, they look more like a free market than a trusted marketplace. It's like the Wild West on their platform. Why do you say that? They started to take in third-party sellers. And if you're going to do that, you have to have a robust system.

And if you're going to chase those profits, then you have to be prepared for the problems that they create. Barcazi says his organization has partnered with major marketplaces like Amazon, eBay, and Ali's. to fight fakes through a forum called the Marketplace Advisory Council, which brings together platforms, payment processors, and brands to develop best practices. When we interviewed Barkasey in April, he said the organization asked Walmart to join the program. Walmart was invited, and we spoke to them two or three times. They never responded. Ultimately, Walmart didn't join the initiative, which officially launched in May.

What does that tell you? They don't care. Otherwise, they'd be part of a program. Otherwise, they'd have robust systems in place. When we asked Walmart about its involvement with the IACC, it said it has attended many of their conferences since 2019, where it discussed marketplace safety with the organization's representatives and other industry partners. Just about a week after we reached out to Walmart, Barcazi said the company asked to meet with him and later join the program. Walmart also made other major changes after we asked for a response to this story. It issued an email to some sellers announcing it will restrict product listings in the beauty and personal care categories. It also said it would require select sellers to participate in an enhanced vetting program

that would require them to submit documentation to verify the authenticity of their products. Changes that addressed some of the issues we raised in our reporting. Barcazi told us Walmart's enhanced vetting program is a critical step forward in protecting consumers, safeguarding legitimate businesses, and restoring trust in the digital marketplace. But if Walmart doesn't continue to strengthen its oversight, its marketplace strategy could pose a risk to the reputation it spent decades building and erode the customer trust at the core of its brand. How did the image of Walmart change for you after you purchase counterfeit supplements on their marketplace? I resent them for having betrayed me.

That's how I feel. I feel like Walmart betrayed me. There is also proposed legislation aimed at curbing these issues. The Shop Safe Act is a federal bill designed to prevent the sale of fakes on online marketplaces. The legislation was widely supported by brands. But online marketplaces, including Walmart, Amazon, eBay, and Etsy, have lobbied against parts of it, according to two Senate Aides. One aide told us these companies preferred to maintain the status quo.

They would rather police themselves, themselves, then be held to new federal requirements. After we reached out, Walmart published a release stating it has been engaging in congressional roundtables and dialogue about the legislation. So far, the bill has failed to make it to a vote, but the same Senate aid told us it is expected to be reintroduced in the current congressional session. For CNBC, I'm Gabrielle Funroo Rouge.