The agency alleged that ex-vice president Chi “Vincent” Ko, through his former company First Pay Solutions, opened hundreds of fake merchant accounts and shell companies to take payments from the unwary.
The FTC claimed that First Data, one of the biggest payment processing companies in the U.S., received multiple “warnings and direct evidence” that Ko’s company was “permeated by fraud” as far back as 2012 but continued to let Ko and First Pay open merchant accounts until 2014.
“First Data is paying $40 million because it repeatedly looked the other way while its payment processing services were being used to commit fraud,” said Daniel Kaufman, deputy director of the FTC’s Bureau of Consumer Protection. “When companies fail to screen out fraudsters exploiting the payment processing system to steal people’s money, they’re breaking the law -- and injuring consumers.”
The FTC filed its complaint on Tuesday in federal court in Manhattan. It announced the settlements with First Data and Ko, which must be approved by a judge, shortly afterward.
The schemes, which applied millions of dollars in illegal charges to consumers’ credit and debit accounts, included a work-at-home business coaching program and a debt relief telemarketing scheme that each took in at least $20 million, according to the FTC.
Even though
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