The FTC’s efforts to police the payment processing industry continue…
An individual and his payment processing company have agreed to settle FTC charges that they repeatedly violated a 2009 court order issued against them. The settlement permanently bans both from engaging in, and assisting others with, payment processing, and includes a $1.8 million contempt judgment against them.
The 2009 court order found that the individual and his company violated Section 5 of the FTC Act by processing debit transactions to consumers’ bank accounts on behalf of an allegedly fraudulent enterprise, while knowing or consciously avoiding knowing that those debit transactions were not authorized by consumers.
The order required the individual and his payment processing company to pay the FTC over $1.7 million, the amount of money consumers allegedly lost through the debits that were processed. The order also required that the defendants more carefully review and monitor their merchant-clients, and prospective merchant-clients, to ensure the merchants were not engaged in deceptive or unfair practices.
The FTC alleges that the defendants repeatedly violated the terms of the 2009 order by failing to properly review and monitor merchant-clients. As a result, FTC attorneys allege, that the defendants have facilitated payment processing for numerous fraudsters, causing serious losses to consumers.
In agreeing to settle the FTC’s charges, the defendants admitted that the FTC possess sufficient evidence to show that they violated the 2009 order, including that they facilitated processing of consumer payments for merchants while knowing or consciously avoiding knowing that the merchants’ business practices were, or were likely to be, deceptive or unfair.
Several of the merchants include defendants previously sued by the FTC.
The new settlement order permanently bans the defendants from working in payment processing in any capacity, and includes a contempt judgment of $1,812,204, which is in addition to the more than $1.7 million judgment in the 2009 order that remains outstanding.
Richard B. Newman is a Federal Trade Commission defense lawyer focusing on federal agency advertising investigations and litigation at Hinch Newman LLP.
Informational purposes only. Not legal advice. Attorney advertising.