Worldwide Payment Processor and Payments Industry Executive to Pay $40.2 Million to Settle FTC Charges of Assisting Fraudulent Schemes and Credit Card Laundering
One of the biggest payment processing companies and its former executive will pay more than $40.2 million to settle Federal Trade Commission charges they knowingly processed payments and laundered, or assisted laundering of, credit card transactions for scams that targeted hundreds of thousands of consumers.
According to the FTC’s complaint, Atlanta-based First Data Merchant Services, LLC (First Data) allegedly ignored repeated warnings from employees, banks, and others that Chi “Vincent” Ko, through his company that served as an independent sales agent (ISO) for First Data, was laundering, and First Data was assisting and facilitating laundering, payments for companies that were breaking the law over a number of years. Ko was later hired as an executive at First Data.
“First Data is paying $40 million because it repeatedly looked the other way while its payment processing services were being used to commit fraud,” said Daniel Kaufman, Deputy Director of the FTC’s Bureau of Consumer Protection. “When companies fail to screen out fraudsters exploiting the payment processing system to steal people’s money, they’re breaking the law – and injuring consumers.”
According to the complaint, Ko, through his prior company, First Pay Solutions LLC (First Pay), opened hundreds of merchant accounts for at least four scams – three that were the subject of FTC actions, and one that was the subject of a U.S. Department of Justice criminal prosecution. The FTC alleges that, from 2012 to 2014, Ko opened accounts under false names, provided Wells Fargo Bank with deceptive information to open the accounts, and ignored evidence that his clients were engaged in fraud. The $40.2 million to be paid in the settlements will be used to provide refunds to consumers harmed by these scams.