A recent FTC settlement has thrust payment processing company BlueSnap into the spotlight, as it agreed to pay $10m to settle a lawsuit over its alleged involvement in processing payments for “deceptive and fraudulent” companies.
According to Finextra Research, the settlement also involves the company’s former CEO Ralph Dangelmaier and Senior Vice President Terry Monteith. The Federal Trade Commission (FTC) accused BlueSnap and its executives of knowingly facilitating fraudulent activities by processing millions of dollars in credit card payments for ACRO Services, despite ample evidence suggesting fraudulent behavior.
According to the FTC’s federal court complaint, BlueSnap and its officers ignored clear signs of fraudulent activity by ACRO Services, which continued from at least 2019 to 2021. Even when presented with warnings and evidence, including reports from Visa indicating a high percentage of disputed charges and direct contact from American Express urging account closures, BlueSnap allegedly continued to process payments for ACRO Services. Internal reports from BlueSnap’s own fraud monitoring team further highlighted ACRO’s fraudulent activities, yet no action was taken to terminate the accounts.
The FTC director of the Bureau of Consumer Protection, Samuel Levine, condemned such actions, stating, “Companies like BlueSnap that knowingly process payments for scammers are breaking the law and making it easier to cheat consumers.”
This settlement underscores the regulatory scrutiny faced by companies in the FinTech sector, particularly those involved in payment processing. It highlights the importance of robust compliance measures and due diligence processes to prevent unwitting involvement in fraudulent activities.
In response to the settlement, BlueSnap, Dangelmaier, and Monteith have agreed to cease processing payments for certain high-risk clients and allocate $10 million towards restitution for affected consumers. This case serves as a cautionary tale for companies operating in the FinTech industry, emphasizing the need for stringent regulatory compliance and ethical business practices.
Samuel Levine, Director, FTC Bureau of Consumer Protection, said, “Companies like BlueSnap that knowingly process payments for scammers are breaking the law and making it easier to cheat consumers.”
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