On May 19, 2020, the Federal Trade Commission announced that it had reached a $40.2 million settlement with a payment processing company and one of its executives after the company allegedly failed to monitor and heed warnings that the executive was processing payments and laundering for fraudulent companies. The simultaneously-filed complaint alleges that this executive opened hundreds of merchant accounts under false names and ignored evidence that his clients were engaging in fraud. Three of these alleged scams resulted in FTC actions and one was the subject of a U.S. Department of Justice criminal prosecution. The company is alleged to have violated the FTC Act and Telemarketing Sales Rule by ignoring repeated warnings from employees, banks, and others about the executive’s activities.
Under the settlement, the company will pay $40 million in consumer restitution to provide refunds to consumers harmed by these scams. Additionally, the executive is required to personally pay $270,373.70 in consumer restitution. The company is also required to screen and monitor certain high-risk clients, implement an oversight program, and undergo monitoring from an independent assessor for the next three years. The executive is banned from conducting payment processing for high-risk clients.