Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Payment processor settles FTC charges of involvement in The Tax Club telemarketing scheme, (Feb 11, 2016)
Organizations Mentioned:Bluefin Payment Systems LLC
By Michael Menzhuber, J.D., LL.M.
Capital Payments LLC, an independent sales organization (ISO) now known as Bluefin Payment Systems LLC, has agreed to settle FTC charges that it enabled a telemarketing scheme called The Tax Club to use merchant accounts to process consumers’ credit card payments, in violation of the Telemarketing Sales Rule (TSR).
The FTC’s complaint alleged that the company ignored red flags about The Tax Club (i.e., high rate of chargebacks, consumer chargeback requests stating that charges were fraudulent and unauthorized, and alerts from financial institutions) and ended its relationship with The Tax Club only after The Tax Club was sued by the FTC and the states of Florida and New York, in 2013.
Under the settlement order, the company is: (1) banned from payment processing or acting as an ISO for several categories of clients; and (2) prohibited from assisting or facilitating any merchant it knows, or should know, is violating the FTC Act or the TSR. It also must screen prospective clients that meet certain criteria, monitor their sales activity to detect indications of deceptive conduct, and terminate contracts with those engaged in deceptive conduct.
A $2.6 million judgment is also imposed. The company will pay $750,000 in partial satisfaction of the judgment with the remainder of the judgment being suspended based on the company’s current financial situation. If the company is found to have misrepresented its financial condition, the full judgment will become due immediately.
The order was entered on February 4 by the U.S. District Court for the Eastern District of New York.
Companies: Bluefin Payment Systems LLC
News: ConsumerProtection FederalTradeCommissionNews