Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC orders Paddle to pay $5 million for role in tech support scam, (Jun 17, 2025)

By George Basharis, J.D.

UK-based payment processor Paddle agrees to permanent ban on processing payments for tech support telemarketers.

The FTC announced that UK-based payment processor Paddle.com Market Limited and its subsidiary Paddle.com, Inc. will pay $5 million and face a permanent ban on processing payments for tech support telemarketers under a proposed settlement resolving allegations that the company facilitated deceptive, foreign-based tech support schemes (FTC v. Paddle.com Market Ltd., No. 1:25-cv-01886 (D.D.C. Jun. 16, 2025)).

According to the complaint, Paddle abused the U.S. credit card system by enabling deceptive foreign operators to access American consumers’ payment methods, causing millions of dollars in consumer harm. The agency alleged that Paddle processed payments for tech support schemes specifically targeting U.S. consumers, including older adults.

The FTC’s case focuses on Paddle’s role as a “merchant of record” or software “reseller,” through which it opened merchant accounts and used them to process card payments for numerous unrelated third-party merchants. This structure allegedly allowed overseas schemes to access the U.S. credit card system and collect payments from American consumers while evading detection by merchant banks and card networks.

The FTC complaint details how Paddle processed payments for two major tech support scams that defrauded consumers of tens of millions of dollars. From at least April 2017 to January 2019, Paddle processed over $11 million in credit and debit card charges for an offshore tech support scam known as Tech Live Connect (TLC), through merchant accounts opened under Paddle’s name.

The operators of the TLC scam created an Indian company, PC Vark, to advertise and sell bogus diagnostic software in the U.S. and elsewhere. This software served as a gateway to lure consumers into contacting TLC’s offshore call centers.

PC Vark used deceptive pop-ups, fake diagnostic tools, scare tactics, and misleading telemarketing to pressure consumers into purchasing expensive and often unnecessary tech support services. Typically, the scam began with an unsolicited pop-up message warning of a virus infection, prompting users to download software that would “confirm” problems and recommend costly repairs, often costing hundreds of dollars.

From April 2020 to at least June 2023, Paddle processed over $37 million in credit and debit card charges for a pair of affiliated deceptive tech support software merchants, Reimage Limited and Restoro Limited. This scam was nearly identical to the PC Vark scam.

Reimage used fake virus or security warnings in pop-ups to trick consumers into downloading “diagnostic” or “optimizer” software. Consumers were then subjected to deceptive sales pitches from offshore telemarketers.

The $5 million monetary judgment will supplement redress for consumers harmed by the Restoro-Reimage scheme. In March 2024, the FTC announced that it had sent more than $25.5 million to affected consumers. Paddle’s payment will add to those consumer refunds.

Comprehensive settlement terms. Under the proposed settlement order, Paddle faces extensive operational restrictions designed to prevent future facilitation of deceptive schemes. The company is permanently prohibited from processing payments for tech support merchants that engage in telemarketing or use pop-up messages about computer security or performance.

Paddle is also barred from assisting deceptive merchants or using tactics designed to circumvent fraud or risk-monitoring programs established by banks and card networks. Prohibited tactics include balancing transaction volume across multiple accounts, using shell companies to obtain additional merchant accounts, or employing services that create “prevented chargebacks” without addressing the root causes of high chargeback rates.

Enhanced due diligence. The settlement establishes comprehensive client screening and monitoring requirements. Paddle must implement effective client screening procedures and provide periodic reporting about merchant-clients' transactions to its payment service providers. For any clients offering technical support products or services, Paddle must test the products on clean computers to ensure they do not make false representations about malware, viruses, or security threats.

For “High-Risk Clients”—those engaged in outbound telemarketing, selling technical support products, or previously subject to enforcement actions—Paddle must collect detailed business information, marketing materials, and financial data, and conduct quarterly test shopping to monitor their consumer representations.

Subscription and disclosure obligations. The order also addresses Paddle’s handling of subscription services with “negative option features,” where a consumer’s inaction results in ongoing charges. Paddle must clearly and conspicuously disclose subscription terms, obtain consumers’ express informed consent, and provide an easy-to-use cancellation method.

Disclosures must include notice that charges will occur unless the consumer takes affirmative steps to cancel, the dates of charges, the amount and frequency of charges, and cancellation instructions.

Compliance and monitoring framework. The settlement establishes a comprehensive compliance monitoring framework. Paddle must submit annual compliance reports and notify the FTC within 14 days of any structural changes to the business. The company must maintain detailed records for five years, including accounting, personnel, and consumer complaint records.

Paddle is also required to submit quarterly reports to payment facilitators and card networks, identifying high-risk and high-chargeback clients. If Paddle terminates a client for compliance violations, it must notify relevant financial institutions within a specified timeframe.

Enforcement message. In a statement accompanying the settlement, FTC Chairman Andrew N. Ferguson, joined by Commissioners Melissa Holyoak and Mark R. Meador, highlighted the growing threat of foreign-based scams targeting U.S. consumers. Ferguson noted that “America is suffering under a serious scam problem,” with millions of Americans affected annually, and emphasized that many of these scams now originate outside the U.S.

He explained that while the FTC can enforce the law against foreign businesses with a U.S. nexus, “international enforcement is often both difficult and expensive.” One effective approach, he said, is targeting domestic companies that enable foreign scammers: “By vigorously requiring domestic actors to obey the law, the Commission can cut off foreign scammers’ use of American companies to prey on American families.”

Ferguson called the Paddle settlement “an important win for American families and businesses,” noting that “by vigorously enforcing our laws in our payment systems, the Commission ensures that private industry takes the steps the law requires to protect Americans from foreigners who would use the payment system to prey on them.”

Attorneys: Russell Scott Deitch for the FTC. Demian Shipe Ahn (Wilson Sonsini Goodrich & Rosati) for Paddle.com Market Ltd.

Companies: Paddle.com Market Ltd.

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