Thursday, May 4, 2023
Nexway, its subsidiaries and two officers could have been on the hook for more—altogether $49.5 million—but most of that court-ordered monetary judgement was suspended, "based on the defendants' inability to pay the full amount," the Federal Trade Commission said in an April 17, 2023, statement.
A complaint filed in U.S. District Court for the District of Columbia, by the Department of Justice on behalf of the FTC, alleges Nexway and its subsidiaries, along with CEO Victor Iezuitov, and Casey Potenzone, chief strategy officer, were at the center of several offshore tech support scams. Those scams netted tens of millions of dollars in credit and debit card payments for bogus computer repairs.
The alleged scams, violations of the FTC Act and the Telemarketing Sales Rule, dated back to at least 2016, the DOJ stated in the complaint.
In a typical scam, telemarketers using pop-up ads hoodwinked consumers into thinking their computers were infected with a virus. In other versions of the scam consumers' computer screens would freeze up and display a phone number to call for help. Either way, the calls went to a call center in India, where victims were convinced to pay for "repairs." The transactions then were processed through the card networks by Nexway, or one of its subsidiaries.
Nexway "engaged in this activity even though it and its officers knew or consciously avoided knowing that its tech support clients were engaged in deceptive marketing practices," the complaint stated.
The complaint also alleged that Nexway engaged in credit card laundering, by allowing the Indian tech support scammers to process payments through Nexway's merchant accounts, even though Nexway was not the merchant running the transactions.
The DOJ estimated the processing of credit card payments on behalf these tech support scammers accounted for a quarter of all of Nexway's business between 2016 and 2020.
"The Department of Justice will not hesitate to pursue and hold accountable payment processors who facilitate tech support scams that defraud consumers," said Brian M. Boynton, head of the DOJ's civil division.
"Companies like Nexway that knowingly launder charges for scammers are breaking the law," added Samuel Levine, director of the FTC's bureau of consumer protection. "The FTC will not hesitate to use its law enforcement powers to stop them."
In addition to consumer redress, the district court order instructed that going forward, Nexway, and its subsidiaries and officers:
Tech support scams are a huge problem and drain on Americans' finances. The FBI ranks this as one of the top five cyber-related frauds affecting Americans' everyday lives.
The FBI reported that tech support scams have more than doubled in recent years, from 14,408 in 2018 to 32,538 in 2022. Victim losses in 2022 exceeded $806,000, the FBI said.
The scams primarily involve call centers in South Asia, mainly India, the FBI noted in a recent report. In response to the rise in such scams, the DOJ and FBI are working with law enforcement agencies in India to go after the scammers.
"In 2022, with the assistance of U.S. law enforcement, Indian law enforcement accomplished multiple call center raids, disruptions, seizures, and arrests of the individuals alleged to be involved in perpetrating these cyber-enabled financial crimes and global telemarketing frauds," the FBI wrote in its 2022 Internet Crime Report. 
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