WASHINGTON—The Federal Trade Commission is taking action against payment processing company BlueSnap and its former CEO, Ralph Dangelmaier and senior vice president, Terry Monteith, charging them with knowingly processing payments for deceptive and fraudulent companies.
The defendants have agreed to a settlement that will require them to turn over $10 million for consumers and stop processing payments for certain high-risk clients, the FTC said.
In a federal court complaint, the FTC charged that BlueSnap and its officers processed millions of dollars in credit card payments for ACRO Services despite substantial evidence that the company was fraudulent. The FTC sued ACRO Services in November 2022.
According to the complaint, BlueSnap, Dangelmaier and Monteith turned a “blind eye to glaring warnings” that ACRO Services was defrauding consumers from at least 2019 to 2021. The FTC said BlueSnap continued processing payments from consumers who were targeted by the scam and even advised ACRO Services on how to avoid fraud detection programs.
The warnings received by BlueSnap and its officers about ACRO were clear, according to the complaint.
The Allegations
According to the FTC:
- In 2019, BlueSnap was told by another payment processor to consider closing ACRO’s accounts due to high rates of chargebacks from consumers, but it left them open. BlueSnap, the complaint charges, continued to process payments for ACRO for over a year even though reports from Visa repeatedly showed that between 29% and 40% of the company’s charges were being disputed as fraudulent and even after American Express directly contacted Monteith asking her to close down ACRO’s accounts.
- In addition to external warnings about ACRO’s fraudulent behavior, BlueSnap’s own internal fraud monitoring team reported to both Dangelmaier and Monteith that ACRO was defrauding consumers and they still failed to act to shut down the company’s accounts, according to the complaint. According to the FTC, Dangelmaier and Monteith provided advice to ACRO’s owners on how to open new merchant accounts to evade fraud detection, and the BlueSnap officers funneled payments through those accounts until BlueSnap’s processing partner ordered it to shut them down.
High Chargeback Rates
The complaint charges that BlueSnap processed payments for other companies accused of fraud including Powerline Group, which was the target of a law enforcement action by the New York Attorney General. The FTC’s complaint notes that, as with ACRO, BlueSnap was aware of very high chargeback rates and continued to process the company’s payments until it was forced to stop in 2021.
The proposed court order agreed to by the defendants will require them to turn over $10 million to the FTC to provide refunds to consumers. In addition, the settlement will prohibit the defendants from providing payment processing services to debt collection or debt relief companies, as well as companies listed through an industry fraud monitoring program.
In addition, the company will be required to closely screen and monitor other high-risk clients and be prohibited from helping any client take steps to evade fraud monitoring, the FTC said.
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