Tuesday , August 20, 2019

Payment Processor Banned Following Violation of FTC Settlement

A federal judge has banned payments provider Priority Payout Corp. and its owner Thomas Wells from ever directly or indirectly working in the payment-processing industry following a violation of a 2009 settlement with the Federal Trade Commission.

Announced last week, the ban, ordered by U.S. District Court Judge James C. Mahan in Nevada, also includes a $1.8 million contempt judgment against Wells and Priority.

The 2009 court order found that Wells and his company, which was then called InterBill Ltd., violated Section 5 of the FTC Act by processing transactions that debited consumer bank accounts on behalf of a fraudulent enterprise known as Pharmacycards, while knowing or consciously avoiding knowing that the debit transactions were not consumer-authorized, the FTC says. Wells and his company were to pay $1.7 million then, to cover the money consumers lost. The order also required Wells and InterBill to better review and monitor its merchants and prospective ones to ensure they did not engage in deceptive or unfair practices.

Since then, Wells and Priority Payout, the successor to InterBill, failed to comply with the 2009 order, the FTC says. Specifically, the FTC alleges Wells failed to “properly review and monitor merchant-clients.” As a result, the FTC alleges, “Wells and Priority have facilitated payment processing for numerous fraudsters, causing serious losses to consumers.”

The new order, signed by the judge on April 10, permanently bans Wells and his company from working in payment processing in any capacity. The $1.8 million judgment is in addition to the $1.7 million from the 2009 order. Wells’ attorney had not responded to a Digital Transactions News inquiry at publication.

This is not the first time the FTC sought to ban an individual or entity from the payment-processing industry. In 2017, G2 Consulting LLC and its owner were banned from the industry following allegations they created straw companies to hide telemarketers’ identities and practices when were they not eligible to open merchant accounts.

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