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ChapterTitleNews

FTC raps processor for

boarding scammers

hould ISOs and their processing partners be
held responsible when scam artists use them to
process payments that turn out to be fraudu-
S lent? The Federal Trade Commission believes
the answer is yes, especially if there are signs of fraud, for
example, accusations of unauthorized transactions.

Last week the FTC proposed a settlement resolving
allegations that California-based Process America Inc. and
the company's three owners opened "scores of merchant
accounts" for Infusion Media Inc. Infusion was an online
marketing company that ran a bogus work-at-home
scheme variously known as Google Money Tree, Google
Pro and Google Treasure Chest.
The FTC shut down that company in late 2009, but only
after it had made more than $15 million in unauthorized
transactions involving consumer credit and debit cards
that were handled by Process America. The FTC alleges
Process America and its principals knew or should have
known the transactions from Infusion were not authorized
by accountholders.

"Evidence that consumers were being charged without
their permission included plainly deceptive statements on
merchant websites, notices that the merchant should be
placed on the Visa and MasterCard chargeback monitoring
programs and chronically excessive chargeback rates," the
commission said in a statement detailing the proposed
settlement. In two years – 2008 and 2009 – Process America
opened 131 merchant accounts that were used by Infusion
to process unauthorized card payments.
Further accusations
The FTC also alleges that Process America went to lengths
to evade Visa Inc. and MasterCard Worldwide fraud
monitoring programs, including distributing transactions
across multiple merchant accounts, a practice known as
load balancing.

To resolve the FTC's allegations, the three company
principals – Kim Ricketts, Keith Phillips and Craig Rickard
– agreed to permanent injunctions from merchant acquiring
ISO and processing businesses. The company also is
banned from engaging in sales activities. In addition, the
order imposed a monetary judgment on one of the owners
and then suspended it, "based on his inability to pay," the
FTC said.

Process America is not the first company to take heat
from the FTC for acquiring or processing payments
from fraudsters. In April 2013, the payment processing
company Automated Electronic Checking Inc. and two

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