FTC gets $10 million settlement in payments fraud case

WASHINGTON – The U.S. Federal Trade Commission announced today that payment processor BlueSnap, Inc., its former CEO Ralph Dangelmaier and Senior Vice President Terry Monteith have agreed to a settlement requiring them to pay $10 million and cease serving certain high-risk customers. Process payments. Prior to this action, the company and its executives were accused of knowingly processing payments for deceptive and fraudulent business.

According to the FTC's complaint filed in the U.S. District Court for the Northern District of Georgia, BlueSnap and its officers processed millions of dollars for ACRO Services, which the FTC sued for fraud in November 2022. Despite overwhelming evidence that ACRO Services engaged in fraudulent activity, BlueSnap continued to facilitate its transactions.

The FTC alleges that from at least 2019 to 2021, BlueSnap ignored multiple warnings from ACRO Services about fraudulent activity. Another payment processor recommended considering closing ACRO's accounts due to high consumer chargeback rates, and it received direct requests from credit card companies to terminate accounts, but BlueSnap continues to maintain a relationship with the company.

Additionally, the report states that Dangelmaier and Monteith were aware of the fraud and that internal teams alerted them to ACRO's deception. Despite this, they allegedly provided ACRO with advice on how to bypass fraud detection systems and continued processing payments until BlueSnap's processing partners requested closure.

The FTC complaint also states that BlueSnap processed payments for other companies accused of fraud, such as Powerline Group, which was targeted by the New York attorney general. Despite the high chargeback rate, BlueSnap reportedly continued to provide processing services to Powerline Group until it was forced to cease in 2021.

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Under the proposed court order, BlueSnap and its executives would hand over $10 million to the FTC for consumer refunds. The settlement also imposes restrictions on its future business operations, including a ban on providing payment processing services to debt relief and collection companies and companies listed through the Industry Fraud Monitoring Program.

They must also implement stricter screening and monitoring procedures for other high-risk customers and refrain from assisting any customer to evade fraud surveillance.

The FTC emphasizes its commitment to protecting consumers by taking legal action against entities and individuals who facilitate fraudulent practices. The commission voted unanimously to authorize staff to file the complaint and proposed stipulating the final order 5-0. This information is based on a press release.

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