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FTC Acts to Block Payment Processor’s Credit Card Laundering ...


David H. Lipman

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FTC Acts to Block Payment Processor’s Credit Card Laundering for Tech Support Scammers

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The Federal Trade Commission has acted to stop Nexway, a multinational payment processing company, along with its CEO and chief strategy officer, from serving as a facilitator for the tech support scammers through credit card laundering. The defendants in the case have agreed to court orders that prohibit them from any further payment laundering and require them to closely monitor other high-risk clients for illegal activity. The complaint and orders were filed by the U.S. Department of Justice on behalf of the FTC.

The FTC’s complaint against Nexway (and several of its subsidiaries and an associated company known as Asknet), its CEO Victor Iezuitov, and its chief strategy officer Casey Potenzone charges that the defendants were at the center of several offshore tech support scams, processing tens of millions of dollars in charges and giving the scammers access to the U.S. credit card network.

“Companies like Nexway that knowingly launder charges for scammers are breaking the law and helping scammers cheat money from consumers,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will not hesitate to use its law enforcement powers to stop them.” 

“The Department of Justice will not hesitate to pursue and hold accountable payment processors who facilitate tech support scams that defraud consumers,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department is committed to protecting consumers from companies that engage in or support deceptive practices.”

According to the complaint, Nexway acted as the payment processor for multiple tech support scams going back to at least 2016, noting that the company’s “premium tech support” clientele accounted for a quarter of all of its business between 2016 and 2020.

The complaint details Nexway’s relationships with tech support scammers, in which Nexway acquired credit card merchant accounts and then used those accounts to collect money from consumers on behalf of the scammers. The complaint charges that Nexway, Iezuitov, and Potenzone were aware that their tech support clients were scammers and directly received numerous complaints about the companies.

The court orders include a number of restrictions and requirements on Nexway and Iezuitov, asknet, and Potenzone:

  • Prohibition on credit card laundering: The orders will prohibit the defendants from laundering sales through their merchant accounts.  
  • Requirement to monitor high-risk clients: The orders require the defendants to screen and monitor any clients they serve who meet criteria that make them an elevated risk of violating the law, and also require them to take action if their clients charge consumers without authorization or violate the Telemarketing Sales Rule (TSR).
  • Prohibition on payment processing or assisting tech support scammers: The orders will prohibit the defendants from engaging in payment processing for tech support companies that use pop ups, telemarketing or false or unsubstantiated advertising.
  • Monetary judgments: The orders require Nexway and its subsidiaries to pay $350,000; Asknet and its subsidiaries to pay $150,000; Iezuitov to pay $100,000; and Potenzone to pay $50,000.

The orders contain a total monetary judgment of $16.5 million, which is partially suspended based on the defendants’ inability to pay the full amount. If the defendants are found to have lied to the FTC about the financial status, the full judgment would be immediately payable.

The Commission vote to authorize the staff to refer the complaint to the DOJ and to approve the proposed consent decree was 4-0. The vote on this matter closed on February 16, 2023, prior to former Commissioner Christine S. Wilson’s departure from the Commission. The DOJ filed the complaint and proposed consent decrees on behalf of the Commission in U.S. District Court for the District of Columbia.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Consent decrees have the force of law when approved and signed by the District Court judge.

The FTC staff attorneys on this matter were Russell Deitch and J. Ronald Brooke, Jr. of the FTC’s Bureau of Consumer Protection.

 

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