Walmart cheated on e-commerce results amid Amazon pressure, says Whistleblower

Sheri Evans
March 19, 2018

Huyn claims he was sacked in January 2017 after voicing his concerns.

The deRubertis Law Firm filed a whistleblower retaliation lawsuit against Walmart Stores Inc.

"Wal-Mart sacrificed and betrayed its founder's key principles of integrity and honesty, pushing those core values aside in its rush to win the e-commerce war at all costs", Huynh said in the 70-page complaint, referring to founder Sam Walton. "In doing this, it realized it must silence any whistleblower who spoke up against its "win at all costs" approach to e-commerce growth".

Huynh, a native of Vietnam, joined Walmart in 2014 from Amazon.

"This litigation is based on allegations by a disgruntled former associate, who was let go as part of an overall restructuring", according to Walmart's statement.

"We take allegations like this seriously and looked into them when they were brought to our attention", he said.

Walmart will vigorously defend itself against the claims, Hargrove added.

Walmart shares closed down fractionally at $87.51 in Thursday trading. In his lawsuit, Huynh posits that Walmart's belated response to Amazon's dominance online led it to cut corners, writing, "By July 2015, Walmart's world was rocked when Amazon's market capitalization exceeded Walmart's". The company has increased e-commerce spending, including roughly $3 billion for its 2016 acquisition of startup Jet.com.

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Ultimately, according to the complaint, after all his attempts failed to convince his superiors about the need to develop better internal controls for risk management, compliance and financial reporting purposes, Huynh reported his concerns - including specific concerns that Walmart was painting a misleading picture of its e-commerce growth - directly to Walmart's U.S. E-Commerce CEO Marc Lore and Executive Vice President and COO Michael Bender. However, the result fell below the previous quarter and also lagged behind the growth reported by Amazon.

Walmart, under the leadership of CEO Doug McMillon since 2014, has made a concerted effort to grow its e-commerce business.

The suit, filed this week in Northern California federal court by Tri Huynh, alleges that Walmart has been lowering its standards to boost the size of its online catalogue; mis-categorizing some items listed for sale, which can result in overcharging some merchants who sell through Walmart.com; and failing to process $7 million in returned items.

That allegedly included paying third-party vendors lower commissions and failing to process customer returns.

Throughout a year ago, it seemed like those moves gave Walmart.com the heft and momentum it needed, with the company reporting high double-digit growth for its online unit.

Huynh said the previously-glowing job reviews he'd received at Walmart turned to corporate complaints as he continually flagged his e-commerce concerns.

He said he was told to stop raising such concerns, and when he eventually brought them to US e-commerce chief Marc Lore in early 2017, he was "abruptly terminated". He seeks unspecified damages for lost wages and economic losses, special damages and punitive damages.

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