“It is a Commission priority to root out fraud in the payments system,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “I am pleased the court held [the payment processor], [and the executives] accountable for violating the requirements of the order they agreed to in 2015. As the court concluded, [the payment processor] and its executives assisted and facilitated scammers in avoiding fraud and risk monitoring programs and failed to conduct the 2015 order’s required underwriting. The court’s order should send a strong signal that the Commission will enforce its orders and continue to prioritize rooting out fraud from the American payment system.”

The court found the defendants unlawfully processed hundreds of millions of dollars in transactions for merchants that were on Mastercard’s Member Alert To Control High-risk merchants (MATCH) list.

The court also concluded the defendants:

• Assisted and facilitated two groups of merchants in avoiding fraud and risk monitoring programs, including by processing so-called “friendly” transactions to mask true chargeback rates and helping a group of merchants both process under different names and shift transactions from closed accounts to other live accounts.
• Failed to conduct required underwriting, including neglecting to collect or verify mandatory business information, ignoring evidence of shell companies, and waiving documentation requirements. Alleged violations included accepting “obviously false” websites listed on payment processing applications “that they failed to further investigate.”
• Processed for merchants that “consistently exceeded” the court order’s chargeback thresholds and failed to conduct required investigations or produce written reports to justify processing, despite red flags. The court found the defendants had “systematically failed to complete [their] reporting obligations” under this portion of the order.

To compensate for harm caused by these violations, the court imposed $6.5 million in civil contempt sanctions against the defendants.