USA: FTC announces $40.2M settlement with payment processor and payments industry executive
The Federal Trade Commission ('FTC') announced, on 19 May 2020, that it had reached a $40.2 million settlement with First Data Merchant Services, LLC whom the FTC charged ('the Complaint') with knowingly processing payments and laundering or assisting in the laundering of credit card transactions for scams targeting consumers. In particular, the Complaint alleges that First Data ignored repeated warning from employees, banks, and others that Chi Vincent Ko, executive for First Data was laundering payments. Furthermore, the Complaint alleges that from 2012 to 2014 Ko, among other things, opened accounts under false names and provided the Wells Fargo Bank with deceptive information to open accounts.
In addition, the Complaint alleges that the defendants violated the FTC Act 1914 ('the FTC Act') and the Telemarketing Sales Rule 16 CFR 310. Finally, under the proposed settlement ('the Proposed Settlement'), First Data will be prohibited from assisting or facilitating FTC Act violations related to payment processing and will be required to, among other things, screen and monitor high-rise merchant-clients. Finally, under the proposed settlement for Ko ('Ko's Proposed Settlement'), Ko will be required to pay $270,373.70 and will be banned from payment processing for certain types of high risk merchants, credit card laundering activities, and making or assisting others in making false or misleading statements, and assisting or facilitating violations of the FTC Act.