BlueSnap, a prominent payment processor, along with its former CEO Ralph Dangelmaier and Senior Vice President Terry Monteith, have agreed to a $10 million settlement with the Federal Trade Commission (FTC). The settlement resolves allegations that they knowingly processed payments for deceptive and fraudulent companies, including ACRO Services.
Background of the Case
The FTC’s federal court complaint detailed how BlueSnap and its executives processed millions of dollars in credit card transactions for ACRO Services, despite overwhelming evidence indicating the company’s fraudulent activities. According to the FTC, between 2019 and 2021, BlueSnap ignored multiple warnings that ACRO Services was defrauding consumers.
Details of the Settlement
Under the terms of the settlement, BlueSnap, Dangelmaier, and Monteith will contribute $10 million to reimburse affected consumers. Additionally, they have agreed to cease processing payments for certain high-risk clients identified as part of the settlement.
Evidence of Malpractice
Visa reports highlighted that between 29% and 40% of ACRO’s charges faced disputes as fraudulent transactions. Furthermore, American Express had reached out directly to Monteith, urging her to terminate ACRO’s accounts—a request that was initially ignored. BlueSnap’s own internal fraud monitoring team also reported directly to Dangelmaier and Monteith about ACRO’s fraudulent activities, yet no immediate action was taken to shut down the accounts.
Broader Implications
This case highlights the broader issue of payment processors facilitating fraudulent activities. “Companies like BlueSnap that knowingly process payments for scammers are breaking the law and making it easier to cheat consumers,” stated Samuel Levine, director of the FTC Bureau of Consumer Protection.
The FTC’s action against BlueSnap serves as a stern warning to other payment processors about the consequences of facilitating fraudulent activities. It emphasizes the need for strict compliance with legal and ethical standards in the processing of financial transactions to protect consumers from fraud.
Moving Forward
The settlement marks a significant step in the FTC’s ongoing efforts to clamp down on deceptive practices in the payment processing industry. It also sets a precedent for how similar cases might be handled in the future, ensuring that payment processors uphold their responsibility to vet and monitor their clients rigorously.
This case will likely lead to increased scrutiny of payment processors, especially those handling high volumes of transactions for diverse clientele, compelling them to enhance their internal compliance and fraud detection capabilities.