Antitrust Law Daily Wrap Up, ADVERTISING NEWS: FTC, State of Florida charge payment processor with credit card laundering, (Jan 8, 2016)

By Linda O’Brien, J.D., LL.M.

The FTC and the State of Florida have charged a payment processing business with credit card laundering and illegally assisting and facilitating a nationwide debt relief telemarketing scheme that allegedly bilked millions of dollars from consumers, the agency announced today.

According to the FTC announcement , when scam operators cannot gain or maintain access to the credit card networks through legitimate means, they frequently turn to illegal credit card laundering as a way to process credit card transactions through another person or entity. This tactic allows the scammer to evade detection and charge the accounts of defrauded consumers. Credit card laundering and helping someone launder are violations of the Telemarketing Sales Rule (TSR).

In an amended complaint (FTC v. E.M. Systems & Services, LLC, File No. 151-0090), filed in the federal district court in Tampa, the FTC and the State alleged that CardReady LLC, an independent sales organization, and executives Brandon A. Becker, James F. Berland, and Andrew S. Padnick arranged for at least 26 shell merchant accounts to be used to process credit card payments for a debt relief operation the agencies sued in June 2015. The agencies charged the payment processor defendants, as well as E.M. Systems & Services LLC, with credit card laundering under the TSR and illegal factoring of credit card transactions under Florida law. The FTC also charged CardReady and its executives with assisting and facilitating the debt relief scam.

In June 2015, a federal court halted and froze the assets of the debt relief operation, pending resolution of allegations that Steven D. Short, Karissa L. Dyar, E.M. Systems & Services LLC, Administrative Management & Design LLC, Empirical Data Group Technologies LLC, Epiphany Management Systems LLC, and KLS Industries LLC falsely promised consumers with credit card debt that, for an up-front fee, they would save them thousands of dollars by reducing their credit card interest rate, in violation of the FTC Act, the FTC’s Telemarketing Sales Rule, and the Florida Deceptive and Unfair Trade Practices Act.

The amended complaint adds telemarketers Jason E. Gagnon, Kenneth B. Sallies, and Matthew B. Thomas defendants.

“Our investigation went beyond the telemarketers who swindled consumers out of their money,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We also stopped the credit card processing operation that hid their illegal transactions. Credit card laundering isn’t just bad business – it’s against the law.”

Companies: CardReady LLC

News: Advertising ConsumerProtection FloridaNews FederalTradeCommissionNews