FTC and First Data Merchant Services Reach $40 Million Settlement
The Federal Trade Commission on Tuesday said First Data
Merchant Services and a former executive agreed to pay $40.2 million to settle
charges that they processed payments and laundered, or assisted in laundering,
credit card transactions for scams that targeted hundreds of thousands of
consumers,
Shares of financial-technology provider Fiserv (FISV) - Get Report, which acquired First
Data Merchant Services in July 2019, at last check were off 0.3% to $104.76.
First Data allegedly ignored repeated warnings from
employees, banks and others that Chi “Vincent” Ko, through his company, which
served as an independent sales agent for First Data, was laundering, and First
Data was assisting and facilitating laundering, payments for companies that
were breaking the law for several years.
Ko was later hired as an executive at First Data, the FTC
said.
Ko, through his prior company, First Pay Solutions, opened
hundreds of merchant accounts for at least four scams, the FTC said. Three were
the subject of FTC actions and one was the subject of a U.S. Department of
Justice criminal prosecution.
The FTC said that from 2012 to 2014, Ko opened accounts
under false names, provided Wells Fargo Bank
(WFC) - Get Report with deceptive information to open the accounts, and
ignored evidence that his clients were engaged in fraud.
First Data allegedly ignored numerous warnings about Ko and
First Pay’s activity.
The $40.2 million
will be used to provide refunds to consumers harmed by these scams. Ko will be
required to pay $270,373.70.
In settling with the agency, First Data and Ko neither
admitted nor denied wrongdoing.
First Data said in a statement that "this agreed
resolution, which relates to a single U.S.-based ISO within the wholesale
channel, is in the best interest of First Data Merchant Services, our clients
and their customers, and consumers."
"We remain committed to ensuring that our business
partners and merchants operate with integrity, and our enhanced practices will
enable us to continue to lead the industry in fraud prevention, and business
and consumer protection," the company said.
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