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Former Walmart exec files lawsuit alleging retailer misled on e-commerce

A former e-commerce executive at Walmart Inc. filed a whistleblower lawsuit in federal court March 15, alleging that the retail giant "painted a misleadingly optimistic picture" of its e-commerce business in its quest for growth against Amazon.com Inc. and fired him when he complained that the company was violating laws.

Tri Huynh, former director of business development and marketplace business in Walmart's e-commerce division, filed a complaint in the U.S. District Court for the Northern District of California, alleging that the Arkansas-based retailer terminated him "abruptly under false pretenses" after he repeatedly raised concerns to senior executives, including a report that he sent alleging "deceptive actions" the retailer was taking to "portray an inaccurate/rosy picture" of the state of its e-commerce business, according to court documents.

Huynh claims he was terminated in January 2017 by the company for alleged performance issues and a company reorganization and restructuring. He also claims he was fired soon after he submitted a formal report outlining examples and charges of ethics violations to Walmart's U.S. e-commerce CEO Marc Lore and Executive Vice President and COO Michael Bender.

Wal-Mart denied the allegations in the lawsuit in a statement emailed to S&P Global Market Intelligence.

"This litigation is based on allegations by a disgruntled former associate, who was let go as part of an overall restructuring," said Randy Hargrove, a Walmart spokesman, in the statement. "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."

Among some of the allegations outlined in the formal report to Walmart executives and detailed in the lawsuit was a charge that Walmart's e-commerce leaders "inflated the total [number] of new sellers launched and the rapid [marketplace] assortment expansion on Walmart.com to overstate" key performance indicators.

The suit also alleges that Walmart miscategorized products in its marketplace and charged excessive sales commission, while failing to process returns worth over $7 million, which consequently inflated sales by that amount between September 2015 and March 2016.

The lawsuit also claims that in the company's "aggressive" push to ramp up indirect measures of e-commerce growth, it allowed unproven sellers to list low-quality assortments, which resulted in those products infiltrating Walmart's online marketplace.