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FTC stops Google-related fraud worth $15 million

Staff writer |
The Federal Trade Commission (FTC) is continuing its crackdown on payment processing operations that enable scam artists to charge consumer accounts despite signs of ongoing fraud and unauthorized transactions.

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The Commission announced a proposed settlement resolving allegations that a payment processor, Process America Inc., and its owners, Kim Ricketts, Keith Phillips and Craig Rickard, used unfair tactics to open and maintain scores of merchant accounts for Infusion Media Inc., which perpetrated the "Google Money Tree" work-at-home scheme. Using these merchant accounts, Infusion Media charged more than $15 million in unauthorized charges on consumers’ debit and credit card accounts.

Payment processors and Independent Sales Organizations (ISOs) enable merchants to charge consumers’ credit cards for products and services. In exchange, payment processors and ISOs get paid for each payment transaction the merchant processes.

In June 2009, the FTC charged the Infusion Media defendants with falsely claiming that consumers could earn $100,000 in six months, misrepresenting an affiliation with Google, and tricking consumers into signing up for automatic monthly charges that would continue until the consumer took affirmative steps to cancel.

The complaint against Process America alleges that the defendants knew or should have known that they were processing charges that consumers had not authorized.

Evidence that consumers were being charged without their permission included plainly deceptive statements on merchant websites, notices that the merchant should be placed in Visa and MasterCard chargeback monitoring programs, and chronically excessive chargeback rates – the percentage of charges that are challenged by consumers and result in the charges being reversed.

From 2008 through 2009, the defendants opened and maintained 131 merchant accounts through which the perpetrators processed more than $15 million in unauthorized charges on consumer debit and credit card accounts.

To keep Infusion Media’s merchant accounts open, the defendants allegedly engaged in tactics that were designed to evade fraud monitoring programs implemented by Visa and MasterCard. These tactics included submitting merchant applications containing false information and "load balancing," distributing transaction volume among numerous merchant accounts. As a result, Infusion Media’s scam operated for nearly a year, and Process America continued to earn fees from its payment processing activity.

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