FTC follows Nuvei case with $12 million Humboldt settlement

Humboldt Merchant Services, a registered ISO, will pay $12 million and accept sweeping restrictions on its business to settle Federal Trade Commission allegations that it knowingly facilitated payment processing for more than 1,000 sham merchants tied to unauthorized billing schemes.

The FTC filed its complaint Sept. 8, 2026, in U.S. District Court for the Eastern District of Michigan. The court entered the stipulated order Sept. 11, closing the case.

According to the complaint, Humboldt opened merchant accounts for shell entities that served as fronts or pass-throughs for fraudulent companies, including Legion Media, which the FTC shut down in 2024. The agency alleged those accounts often generated chargeback rates nearly 10 times higher than levels card brands consider excessive.

"Humboldt was processing payments for companies despite red flags indicating they were scamming consumers," said Katherine White, deputy director of the FTC's Bureau of Consumer Protection.

FTC widens scrutiny of processors

The Humboldt case follows the FTC's Sept. 4 action against Nuvei, which agreed to pay $4.85 million to settle allegations that it opened and maintained accounts for merchants it knew or should have known were engaged in deceptive conduct. In that matter, the FTC also imposed enhanced merchant screening and monitoring requirements.

Taken together, the two cases put renewed attention on the role ISOs, processors and acquiring banks play as gatekeepers to the card networks.

In the Humboldt complaint, the FTC alleged the company opened sham accounts despite warning signs that merchants were shell companies. It also accused Humboldt of helping increase transaction approvals by moving the accounts to a lower-risk bank identification number (BIN) associated with an affiliated entity.

The complaint also describes load balancing, in which fraudulent merchants spread transactions across multiple accounts to keep individual chargeback levels below card-network monitoring thresholds. The FTC alleged Humboldt knowingly facilitated or consciously avoided knowing about such practices.

Restrictions reach high-risk merchants

Under the order, Humboldt is permanently prohibited from providing payment-processing services to several categories of merchants, including straw companies; merchants placed on Mastercard’s MATCH list for reasons such as excessive chargebacks, laundering or fraud; and merchants already subject to law enforcement action.

The order also bars Humboldt from engaging in or assisting credit card laundering, supplying false or misleading information to obtain processing services and using tactics designed to evade fraud and risk monitoring, including load balancing. The $12 million payment is designated for consumer redress.

The pattern in the Humboldt and Nuvei cases suggests the FTC is focusing not only on the conduct of merchants but also on what payment providers knew, ignored or failed to investigate. The cases reinforce the importance of underwriting and ongoing merchant monitoring rather than treating due diligence as a one-time boarding requirement.

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