Analysis · Litigation & decisions
Payment Processors Pay $650,000 Over Tech Support Telemarketing Charges
The bottom line: companies that process payments for telemarketers can face liability under the Telemarketing Sales Rule (TSR) when they know, or consciously avoid knowing, that their clients are committing fraud.
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What happened
On April 17, 2023, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) announced that the government would collect $650,000 in consumer redress from a group of payment companies and two individuals.
The corporate defendants were Nexway, SASU; Nexway Group AG; Nexway, Inc.; asknet Solutions AG; and asknet, Inc. (collectively, Nexway). The individual defendants were Casey Potenzone and Victor Iezuitov.
The payment resulted in the suspension of a $49.5 million total monetary judgment entered by the court.
The allegations
The government filed its complaint in the U.S. District Court for the District of Columbia. It alleged that since at least August 2016, the defendants violated the FTC Act and the TSR by processing credit card payments for India-based Tech Live Connect and other foreign clients running tech support scams.
According to the complaint:
- Clients caused deceptive pop-ups to appear on consumers' computers, warning of a virus or freezing the screen, and displaying a phone number.
- Consumers who called reached call centers in India and were persuaded to pay for "repairs."
- Nexway's merchant account processed the charges, and Nexway earned a commission on each one.
- Nexway allegedly kept working with these clients despite knowing or consciously avoiding knowing about the fraud.
The government also alleged "credit card laundering." That term means letting a client run charges through your merchant account when you are not the actual merchant on the transaction.
These are allegations in a complaint resolved by settlement.
Why it matters
The TSR reaches beyond the people who make the calls. It also covers those who provide "substantial assistance or support" to a telemarketer while knowing, or consciously avoiding knowing, of violations. Payment processing is a classic example.
The phrase "consciously avoiding knowing" matters. Looking away from obvious warning signs is not a defense.
Practical steps
- Underwrite telemarketing merchants carefully. Ask how they acquire customers and what they sell.
- Do not let one client process through another's merchant account.
- Track chargebacks and complaints and act on patterns.
- Document your diligence. If you terminate a client, record why.
Not legal advice. TCPA.com provides general information, not legal advice, and is not a substitute for the advice of an attorney. Do not rely on it. Verify any action with your own licensed lawyer before you take it. See our Terms of Use.
Primary sources
About the Author: Harrison Gevirtz
Harrison Gevirtz serves as the Chief Strategy Officer (CSO) of Ringba, a call tracking and pay per call platform, and is based in Las Vegas, Nevada. Harrison Gevirtz is a serial operator in call tracking, call routing and telemarketing operations, and for the past several years he has focused on how federal regulations affect the daily operations of these industries. At TCPA.com, Harrison Gevirtz covers TCPA litigation, Telemarketing Sales Rule (TSR) enforcement, tech support fraud prosecutions and Federal Communications Commission (FCC) rulemaking in a way that's accessible to the non-lawyer executive or compliance manager.
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