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Insights and Expertise

ment processor being sued for failing to comply with
contractual obligations, resulting in financial losses
for a merchant. Another example is negligence in se-
curing payment data, leading to a data breach and
subsequent damages.

Legal ease: • Criminal liability: Criminal liability involves the
prosecution of a party for actions that are considered
offenses against society or the state. In payment pro-
cessing, this can include fraud, money laundering
or other illegal activities that violate criminal laws.
Criminal claims are prosecuted by attorneys general
at the federal or state level.

Examples of criminal liability in payments include a
payment processor being prosecuted for facilitating
fraudulent transactions, money laundering, or know-
Civil versus criminal ingly processing payments for illegal activities such as
online gambling or drug trafficking.
liability in payments Distinctions between civil and criminal liability

By Adam Atlas Following are six key differences between the way civil
and criminal liability are identified and handled in the
Attorney at Law courts.
re you old enough to remember the O.J. 1. Purpose and objectives
Simpson trial? If you are, you got a great les-
son on the difference between civil and crimi- The primary purpose of civil liability is to provide res-
A nal liability. Simpson's ex-wive Nicole Brown titution or compensation to the injured party. It aims
Simpson was found dead outside her condominium in to make the victim whole by awarding damages or
Los Angeles. Her friend Ronald Goldman, a waiter who specific performance. Since most payments relation-
had come to her home to return a pair of eyeglasses left ships are based on contracts (for example, ISO agree-
behind at a restaurant, was lying a few feet away, stabbed ments and merchant agreements) civil liability in pay-
to death. ments usually arises from contractual obligations.
Outside of payments, parties can become liable for
A criminal-court jury found Simpson, a former great NFL civil claims without contract, such as claims in dam-
Buffalo Bills running back, not guilty of murder in 1995, ages from car accidents or even brawls.
but a separate civil trial jury found him liable in 1997
for both deaths and ordered him to pay $33.5 million to The objective of criminal liability is to punish the
relatives of Brown and Goldman. The criminal case was a wrongdoer, deter future criminal behavior, and pro-
media sensation. tect society. It involves penalties such as fines, impris-
Two types of legal liability onment, or probation.
2. Burden of Proof
In the much less sensational payments space, it's
worthwhile considering the difference between civil and In civil cases, the plaintiff's burden is to demonstrate
criminal liability. Let's start by defining these two key that it is more likely than not that the defendant's ac-
types of legal liability: tions caused the harm. This is known as the "prepon-
derance of the evidence" standard. Lawyers and their
• Civil liability: In the context of payment processing, clients marshal all available evidence to convince a
civil liability refers to the responsibility of a party to
compensate another for harm or loss caused by their judge, jury or arbitrator that their claim is more wor-
thy than that of the opponent.
actions or omissions. This can include breaches of con-
tract, negligence, or other wrongful acts that result in In criminal cases, the burden of proof is much high-
financial loss or damage to another party. er. The prosecution must prove the defendant's guilt
"beyond a reasonable doubt," which is a more strin-
Civil claims are brought by aggrieved parties, such as gent standard than the preponderance of the evidence
a processor that believes an ISO has wrongfully solic-
ited merchants under an ISO agreement. standard. The reason the burden of proof in criminal
law is so much higher is that it results in taking away
Examples of civil liability in payments include a pay- a person's liberties (that is, going to prison), which
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