District Court Approves $8.6-Million Settlement for Fraudulent Check Processing

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The U.S. District Court for the Western District of Texas recently approved a settlement in the FTC’s lawsuit against defendants who admitted to illegally processing payments for telemarketing scammers.

The settlement required the defendants to admit to allegations in an FTC complaint that the defendants, in processing payments for telemarketing scams, had used remotely created payment orders (RCPOs) to request withdrawals from fraud victims.  Under the Telemarketing and Consumer Fraud and Abuse Prevention Act, it is illegal to use RCPOs to process telemarketing payments because they are difficult to monitor and do not require a payer’s signature to withdraw funds from the payer’s account. The defendants also admitted to knowing or consciously avoiding knowledge that they were processing fraudulent claims.

The court’s stipulated order permanently enjoins the defendants from processing electronic payments.  It also requires them to pay over eight-and-a-half million dollars into an FTC-administered fund to help consumers who were defrauded by the telemarketing scams.

In a press statement announcing the settlement, an FTC spokesperson explained that the Commission is “committed to rooting out payment processors and other companies who actively facilitate and support these fraudulent schemes.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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