WASHINGTON - The Federal Trade Commission announced today that payment processor BlueSnap, Inc., its former CEO Ralph Dangelmaier, and senior vice president Terry Monteith have agreed to a settlement requiring them to pay $10 million and cease processing payments for certain high-risk clients. This action follows charges that the company and its executives knowingly processed payments for deceptive and fraudulent businesses.
According to the FTC's complaint, filed in the U.S. District Court for the Northern District of Georgia, BlueSnap and its officers processed millions of dollars for ACRO Services, a company the FTC sued in November 2022 for fraud. Despite substantial evidence indicating ACRO Services was engaging in fraudulent activities, BlueSnap continued to facilitate its transactions.
The FTC alleges that from at least 2019 to 2021, BlueSnap ignored multiple warnings of fraudulent behavior by ACRO Services. Even after being advised by another payment processor to consider closing ACRO's accounts due to high rates of consumer chargebacks and receiving direct requests from credit card companies to terminate the accounts, BlueSnap continued the relationship.
Furthermore, reports claim that Dangelmaier and Monteith were aware of the fraud, with internal teams alerting them to ACRO's deceitful practices. Despite this, they allegedly advised ACRO on how to bypass fraud detection systems and continued to process payments until BlueSnap's processing partner demanded a shutdown.
The FTC's complaint also notes that BlueSnap processed payments for other companies accused of fraud, such as Powerline Group, which was targeted by the New York Attorney General. BlueSnap reportedly maintained processing services for Powerline Group despite high chargeback rates until being compelled to stop in 2021.
Under the proposed court order, BlueSnap and its officers will relinquish $10 million to the FTC for consumer refunds. The settlement also imposes restrictions on their future business operations, including a prohibition on providing payment processing services to debt relief and collection companies and those listed through industry fraud monitoring programs.
They must also implement more rigorous screening and monitoring procedures for other high-risk clients and avoid assisting any client in evading fraud monitoring.
The FTC emphasizes its commitment to pursuing legal action against entities and individuals that facilitate fraud, thereby protecting consumers. The unanimous Commission vote authorizing the staff to file the complaint and proposed stipulated final order was 5-0. This information is based on a press release statement.
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