Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Payment processor will remit $1.1 million to FTC to settle charges it facilitated telemarketing scammers, (Jun 11, 2014)

By Greg Hammond, J.D.

Independant Resources Network Corp., doing business as IRN Payment Systems (IRN), has agreed to pay or surrender $1.1 million to the FTC in settlement of charges that it violated the Telemarketing Sales Rule (TSR) by knowingly assisting and facilitating a credit card interest rate reduction scam that cheated consumers out of approximately $10 million, the FTC announced.

According to the FTC’s complaint, IRN was charged with facilitating Innovative Wealth Builders, Inc.’s telemarketing scam, which falsely promised consumers that it could reduce their credit card interest rates and save consumers thousands of dollars. IRN was the exclusive payment processor for Innovative Wealth during most of the time the scam was operated. The FTC alleged that IRN knew or consciously avoided knowing about Innovative Wealth’s telemarketing scam, but nevertheless chose to continue profiting from the credit card transactions. The complaint noted that while the average credit card transaction chargeback rate is less than one percent, the chargeback rates for Innovative Wealth’s transactions were above 20 percent and sometimes reached 40 percent.

IRN agreed to a settlement amount of $3.48 million, but that amount will be suspended upon the company’s payment of $400,000. In addition, IRN agreed to release any claim to approximately $700,000 in reserve funds that the court previously required the company turn over in a preliminary injunction order.

The settlement agreement also bans IRN from: (1) engaging in payment processing for clients that sell any debt relief product or service; (2) engaging in payment processing for collection agencies, credit card protection services, lead source providers, money making systems, or similar businesses without directing upfront screening and ongoing monitoring; and (3) assisting or enabling a client they know, or should know, is making misrepresentations to consumers or engaging in the unauthorized billing of customer accounts.

The Commission approved the stipulated order by a vote of 5-0.

News: ConsumerProtection FederalTradeCommissionNews