A Payment Processor Will Pay $4.85 Million for Banking Scammers. It Ran More Than $30 Million of Charges for a Single Tech-Support Scheme.

When a scam takes money from a consumer's card, someone had to let the scammer accept cards. That is the business the Federal Trade Commission went after on September 4, when it announced a settlement with the payment processor Nuvei. The company will pay $4.85 million, which the FTC says it will distribute as consumer redress, and will accept an order rewriting how it screens the merchants it signs.

Who is named

The complaint names Nuvei Corporation, a Canadian corporation, along with Nuvei International Group Limited (formerly SafeCharge International Group Limited, of Guernsey), Nuvei Limited (formerly SafeCharge Limited, of Cyprus), SafeCharge Digital Limited (Cyprus) and Nuvei Technologies Inc. (a Delaware corporation).

What the complaint alleges

• Processing payments for scammers, including tech support schemes aimed at U.S. consumers.
• Processing more than $30 million in payments between 2017 and 2023 for Reimage, described as an offshore tech support scam.
• Opening and maintaining merchant accounts for businesses selling money-making opportunities with false earnings claims, including one identified as DK Automation.
• Facilitating accounts for merchants impersonating government agencies, including one identified as American Tax Service.
• Maintaining accounts for merchants that other processors had already terminated over excessive chargebacks or fraud.

The FTC frames the conduct as unfair practices under the FTC Act and as assisting and facilitating deceptive telemarketers under the Telemarketing Sales Rule. In the agency's summary of the case, Nuvei "opened and maintained payment processing accounts for merchants that it knew or should have known were engaged in deception, including tech support scams that took millions of dollars from consumers."

What the order requires

• A ban on providing payment services to entities selling tech support products through outbound telemarketing or through pop-up messages about a device's security or performance.
• A prohibition on making false statements to obtain merchant accounts.
• A prohibition on evading the fraud-monitoring programmes run by banks and card networks.
• Screening of prospective and existing clients, with particular attention to those using outbound telemarketing.
• Enhanced investigation of clients whose chargeback rates exceed specified limits.

Why the chargeback rate is the tell

A chargeback is a cardholder's successful dispute of a charge. A merchant with an unusually high chargeback rate is, by definition, a merchant a lot of customers say took money they should not have. Card networks already monitor those rates and impose penalties above thresholds. The FTC's theory in this case is that a processor which sees the rate, and keeps the account open anyway, is not a bystander. The order attaches obligations to exactly that signal.

For consumers

The practical point is narrow but useful: a charge that appears on a statement has passed through at least one firm whose job was to vet the merchant. The dispute process exists partly because that vetting fails. Consumers who believe they were charged by one of the schemes described in the complaint would look to the FTC's refund administration process, which the agency runs case by case and announces separately.