The FTC alleged that the company violated numerous provisions of the 2015 order while processing for companies expressly prohibited by the order. This includes a group of merchants that have separately been indicted for crimes related to this processing, according to the FTC.
“[The company] and its operators flagrantly violated an FTC order requiring reasonable steps to prevent and detect fraud,” said FTC lawyer Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “We will not hesitate to hold accountable companies that ignore red flags and distort the honest functioning of the U.S. payment system.”
The FTC alleges that the company and its operators alleged violations include:
- Processing hundreds of millions of dollars in payments for at least three clients on Mastercard’s Member Alert To Control High (MATCH) list, which includes merchants terminated for violating card brand rules such as having high chargeback rates. Chargebacks occur when a consumer challenges a credit card transaction because the product or service received is not as described.
- Assisting and facilitating clients’ tactics to avoid bank and credit card network fraud and risk monitoring programs.
- Processing transactions for high-risk clients without engaging in a reasonable effort to screen those clients’ business practices to determine if they are, or are likely to be, deceptive.
- Failing to monitor high-risk clients’ sales and transactional activity to determine whether their businesses are engaged in practices that are deceptive, including ceasing all processing for clients with high chargebacks without establishing those clients were not engaged in deception.
Given their repeated violations of the 2015 order, the company and individuals should be held in contempt and the court should award compensatory relief for injured consumers as well as ordering actions to force the company into compliance, according to the FTC.
The motion was filed in the U.S. District Court for Nevada.