FTC alleges ISO, sales agents laundered millions in credit card charges

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Consumer scams need four things to survive: food, water, air – and access to the credit card system. Credit card networks build protections into the system to engage lawful businesses while keeping an eye out for fraud. When people use tactics to try to work around those protections, law enforcers take notice. Illustrating this principle is an FTC action charging Arizona-based Electronic Payment Solutions of America, Inc. and related companies, Colorado-based Electronic Payment Systems, LLC, and six individuals with laundering millions of dollars of credit card charges through fraudulent merchant accounts.

First, a Credit Card 101 refresher. To accept credit cards, a business needs a merchant account with an acquirer. The acquirer typically has relationships with the credit card companies (MasterCard, Visa, etc.) and also enters into contracts with independent sales organizations (ISOs) to sign up merchants.

When the system performs as it should, ISOs serve an important gatekeeper function by screening out questionable merchants and identifying them if problems arise later. They’re supposed to take steps to ensure that the merchant is legit and to respond accordingly if it appears that fraudmeisters that can’t get merchant accounts under their own names are trying to sneak in. Tell-tale signs could include high consumer complaint rates, excessive chargebacks, or a history of illegal activity.

But when an ISO ignores obvious red flags that something is amiss or if the ISO is in cahoots with fraudsters to get them access to the credit card system, consumers can end up injured. That’s why processing one company’s credit card transactions through another company’s merchant account is a big-time no-can-do. Credit card companies forbid it and it violates the Telemarketing Sales Rule.

In 2015, the FTC secured court orders against multiple defendants involved in Money Now Funding, an outfit that had taken consumers for more than $7 million through bogus business opportunities and work-at-home schemes. End of story? Not on your life.

The new lawsuit alleges that the defendants – an ISO and its sales agents – submitted and approved fraudulent merchant applications in the names of more than 40 fictitious companies affiliated with Money Now Funding. According to the complaint, the ISO processed transactions through the fictitious companies’ merchant accounts despite obvious signs that fraud and credit card laundering was afoot.

The complaint includes allegations of what was going on behind the scenes. According to the FTC, the defendants caused the laundering of close to $6 million in payments from consumers’ credit cards through the fraudulent accounts they helped secure.

Filed in federal court in Arizona, this allegation of credit card laundering is a case to watch.
 

Comments

Hi,
I am a victim of a deceptive marketing/at home business scam pertaining to credit card processing, credit card terminal leasing for small business. I lost over $11,500. I have yet to recover $6500. The companies involved identified themselves to me as- Alpha Marketing Group LLC, Effective Design Solutions, IBC Strategies, and IWDCC all are apparently based in Arizona. I have documentation and credit card charges to prove my case. Although, I had to turn 2 of my credit cards that were charged by these criminals, over to a debt settlement company. I did make a formal complaint with the FTC in late 2017.

I have a problem with a credit card company. Discover, they told me I am owing them 7500 credit card debt. So I requested for the transaction history for six month. It took the months before they could send. But they refuse to send what I actually requested for. Not only that. I set a payment plan I. Order to reduce the money they claim I am owing. This plan requires me not to make use of the credit card. But after something. They decided to remove the agreed minimum payment and update it with a lesser figure in order to increase the interest, this happened without my notice and it lasted for some months. When I found out. I called them and they apologize for that. Now they have repeated same thing and I decided to remove my payment method because they are not following the agreement I had with them. Also I notice that the last balance on my account increase instead of decreasing by almost 100 dollar. So I need a help to stop this payment because I don’t believe I own what they are charging me.

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