Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Payment processor liable for $1.7M for TSR violations, (May 20, 2015)

By Greg Hammond, J.D.

Payment processor Universal Processing Services of Wisconsin, LLC, along with a telemarketer and his company HES Merchant Services Co., Inc., were jointly ordered to pay over $1.7 million to the Commission for assisting in and facilitating telemarketing violations under the Telemarketing Sales Rule (TSR). The federal district court in Orlando entered a permanent injunction and final monetary judgment against Universal and HES (FTC v. WV Universal Management, LLC, May 19, 2015).

According to the Commission’s complaint, certain defendants, doing business as Treasure Your Success (TYS), telemarketed a credit card interest rate reduction scheme through prerecorded voice messages. The messages would claim that TYS could substantially reduce consumers’ credit card interest rates in exchange for an upfront fee. Although TYS representatives would claim that a fee would not be charged until a consumer had received the promised rate reductions, or until the consumer signed a contract, the fees would generally be charged to consumers’ credit cards during the telephone call or immediately afterward.

On November 18, 2014, the court granted the FTC’s motion for summary judgment, finding Universal liable for assisting and facilitating telemarketing violations, by providing the interface with the banks to handle credit card payments while knowing or avoiding knowing of the underlying TSR violations. The final monetary judgment holds Universal jointly and severally liable for $1,734,972 as equitable monetary relief.

“The defendants blasted thousands of people with illegal robocalls and lied about helping relieve their credit card debts,” stated FTC Bureau of Consumer Protection Director Jessica Rich. “Now they’re out of the robocall business. The court’s decision also shows that it’s bad business for payment processors to help scammers take people’s money.”

The permanent injunction prohibits Universal from processing payments for clients it knows or should have known: (1) fall into certain categories that received close industry attention, such as debt relief services; (2) make misrepresentations to consumers; (3) charge consumers without their authorization; and (4) otherwise violate the FTC Act or the TSR.

The case is No. 6:12-cv-1618-ORL-22KRS.

Attorneys: Mark L. Rosenberg (Bregman, Berbert, Schwartz & Gilday, LLC) for Universal Processing Services of Wisconsin, LLC. Christopher D. Panek, FTC.

Companies: Universal Processing Services of Wisconsin, LLC; HES Merchant Services Co., Inc.

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