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Monday, May 6, 2024

BlueSnap settles FTC charges for working with bad actors

The Federal Trade Commission disclosed a significant enforcement action against global payments technology provider BlueSnap Inc., its former CEO Ralph Dangelmaier, and Senior Vice President Terry Monteith, for their alleged roles in facilitating transactions for deceptive businesses.

As part of a May 1, 2024, settlement, the defendants will pay $10 million and implement stringent measures to curb fraudulent practices.

This legal action comes after the FTC's investigation revealed that BlueSnap processed millions of dollars in credit card payments for ACRO Services from 2019 to 2021 despite clear warnings and high rates of disputed transactions. The FTC sued ACRO for fraud in November 2022.

“Companies that process payments for scammers contribute to the ease with which consumers can be cheated,” stated Samuel Levine, director of the FTC’s Bureau of Consumer Protection. He emphasized the commission's commitment to prosecuting firms and executives who facilitate fraud.

The complaint highlighted that BlueSnap and its top executives ignored multiple red flags regarding ACRO Services, including advisories from other payment processors and alarming chargeback rates reported by credit card companies. Reports from Visa showed that up to 40 percent of ACRO’s charges were contested as fraudulent. Furthermore, American Express had directly contacted defendant Monteith to terminate ACRO’s accounts, but to no avail.

Moreover, the FTC alleges that Dangelmaier and Monteith advised ACRO on how to circumvent fraud detection measures, enabling continued illicit billing practices through new merchant accounts. This complicity extended until BlueSnap’s processing partners mandated the shutdown of these operations, according to the FTC.

The settlement will not only require the turnover of $10 million to the FTC for consumer refunds but will also enforce a ban on processing payments for debt collection and debt relief companies, and other high-risk businesses identified through industry fraud monitoring programs. BlueSnap will also need to enhance its screening and monitoring of potentially risky clients.

BlueSnap, known for enhancing mobile checkout experiences and increasing payment conversions for merchants, was also found to have processed payments for Powerline Group, another dubious entity that was implicated in fraudulent activities and targeted by a law enforcement action by the New York Attorney General.

The unanimous Commission vote to file the complaint reflects a robust stance against corporate facilitation of fraud. This action was filed in the U.S. District Court for the Northern District of Georgia.

The FTC stated that the settlement aligns with its broader mission to protect consumers and promote fair competition. The agency continues to advise the public to be vigilant and report any suspicious business practices through their platforms.

After more than 11 years with BlueSnap, Ralph Dangelmaier is now a strategic advisor for the Payments Advisory Team. Monteith, who has been with BlueSnap since 2013, continues in her roles in product management and payments operations for the company. end of article

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