Payment Processor Settles FTC Case Alleging It Assisted in Fraudulent Schemes
Allied Wallet, described as a provider of e-commerce merchant services and online payment processing services, settled claims by the Federal Trade Commission (FTC) that it assisted numerous scams by knowingly processing fraudulent transactions to consumers’ accounts.
According to the complaint, Allied Wallet assisted companies that were the subject to law enforcement action by the FTC and the SEC, including Stark Law, a phantom debt collection scheme; TelexFree, a pyramid scheme; and MOBE and Digital Altitude, two business coaching schemes that defrauded consumers with claims they would make substantial income. Some of Allied Wallet’s deceptive practices included creating fake foreign shell companies to open accounts in their names, submitting dummy websites and other false information to merchant banks, and actively working to evade card network rules and monitoring designed to prevent fraud.
Along with large monetary penalties, the order imposes stringent screening and monitoring requirements on payment processing for certain other categories of merchants to ensure proper screening and vetting by Allied Wallet. For the FTC press release, visit FTC.gov.
This case should be a reminder to all payment processors to perform due diligence and actively monitor client transactions. For more information on unfair acts or practices in violation of Section 5(a) of the FTC Act, please contact [email protected] or visit us online at kennyhertzperry.com.
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Kennyhertz Perry represents individual and corporate clients faced with the increased use of criminal enforcement to address business practices, particularly as they relate to financial issues. Mr. Perry brings his enforcement experience as well as his substantial prior experience in white-collar criminal defense practice, and as a firm, we represent corporate clients and individual officers and directors at every stage of government investigations and enforcement actions – including white collar criminal matters – initiated by state and federal agencies, including the Department of Justice, SEC, CFTC, FTC, and FINRA.
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