Is Walmart cheating in its race to close the gap between Amazon and its own online business?
A new lawsuit from a former Walmart business development executive claims it is.
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.
Huynh says that he was terminated from his job in 2017 as retaliation for being a whistleblower by repeatedly bringing his concerns to e-commerce division leaders, and is suing for unspecified damages.
“This litigation is based on allegations by a disgruntled former associate, who was let go as part of an overall restructuring,” a Walmart rep tells Recode. “We take allegations like this seriously and looked into them when they were brought to our attention. The investigation found nothing to suggest that the company acted improperly. We intend to vigorously defend the company against these claims.”
The suit comes as Walmart has pumped billions of dollars into its e-commerce business over the last few years, including the acquisition of Jet.com, to improve its websites and narrow Amazon’s lead in the space.
Huynh, who worked for Amazon previously, joined Walmart in 2014 as a director of business development for its online marketplace, which allows outside sellers to hawk their wares on Walmart.com alongside Walmart’s own products.
Huynh said lax internal controls allowed for frequent miscategorization of items sold by marketplace sellers, resulting in Walmart charging them a higher commission on sales than it should have. The suit also claimed that Walmart boasts about the size of its online catalogue but counts items that aren’t actually available for customers to purchase.
He also alleged that the giant retailer lowered its standards by allowing low-rated sellers to flood the Walmart.com marketplace with overpriced goods to artificially boost the number of items Walmart publicly claims are available through its marketplace.
Huynh said the lowering of standards resulted in an influx of inappropriate items, such as mugs labeled with phrases like “got Hitler?” and “got retard?”
Bloomberg first reported news of the lawsuit.
This post has been updated with a comment from Walmart.
This article originally appeared on Recode.net.