Notice2022-06306
Electronic Payment Systems, LLC; Analysis of Proposed Consent Order To Aid Public Comment
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 25, 2022
Issuing agencies
Federal Trade Commission
Abstract
The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices. The attached Analysis of Proposed Consent Order to Aid Public Comment describes both the allegations in the complaint and the terms of the consent order--embodied in the consent agreement--that would settle these allegations.
Full Text
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<title>Federal Register, Volume 87 Issue 58 (Friday, March 25, 2022)</title>
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[Federal Register Volume 87, Number 58 (Friday, March 25, 2022)]
[Notices]
[Pages 17089-17091]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-06306]
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FEDERAL TRADE COMMISSION
[File No. X170045]
Electronic Payment Systems, LLC; Analysis of Proposed Consent
Order To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices. The attached Analysis of Proposed Consent Order to Aid
Public Comment describes both the allegations in the complaint and the
terms of the consent order--embodied in the consent agreement--that
would settle these allegations.
DATES: Comments must be received on or before April 25, 2022.
[[Page 17090]]
ADDRESSES: Interested parties may file comments online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write ``Electronic
Payment Systems, LLC; File No. X170045'' on your comment, and file your
comment online at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by following the
instructions on the web-based form. If you prefer to file your comment
on paper, mail your comment to the following address: Federal Trade
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite
CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Jody Goodman (202-326-3096), Bureau of
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue
NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
at <a href="https://www.ftc.gov/news-events/commission-actions">https://www.ftc.gov/news-events/commission-actions</a>.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before April 25, 2022.
Write ``Electronic Payment Systems, LLC; File No. X170045'' on your
comment. Your comment--including your name and your state--will be
placed on the public record of this proceeding, including, to the
extent practicable, on the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
Due to the COVID-19 pandemic and the agency's heightened security
screening, postal mail addressed to the Commission will be subject to
delay. We strongly encourage you to submit your comments online through
the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
If you prefer to file your comment on paper, write ``Electronic
Payment Systems, LLC; File No. X170045'' on your comment and on the
envelope, and mail your comment to the following address: Federal Trade
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite
CC-5610 (Annex D), Washington, DC 20580. If possible, submit your paper
comment to the Commission by overnight service.
Because your comment will be placed on the publicly accessible
website at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include sensitive
personal information, such as your or anyone else's Social Security
number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2),
16 CFR 4.10(a)(2)--including in particular competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website--as legally
required by FTC Rule 4.9(b)--we cannot redact or remove your comment
from that website, unless you submit a confidentiality request that
meets the requirements for such treatment under FTC Rule 4.9(c), and
the General Counsel grants that request.
Visit the FTC website at <a href="http://www.ftc.gov">http://www.ftc.gov</a> to read this document
and the news release describing the proposed settlement. The FTC Act
and other laws that the Commission administers permit the collection of
public comments to consider and use in this proceeding, as appropriate.
The Commission will consider all timely and responsive public comments
that it receives on or before April 25, 2022. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see <a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``FTC'' or ``Commission'') has
accepted, subject to final approval, an agreement containing a consent
order from Electronic Payment Systems, LLC, also d/b/a EPS, Electronic
Payment Transfer, LLC, also d/b/a EPS, John Dorsey, and Thomas McCann
(``EPS'').
The Commission has placed the proposed Order on the public record
for thirty days for receipt of comments by interested persons. Comments
received during this period will become part of the public record.
After thirty days, the Commission will again review the agreement and
the comments received, and will decide whether it should withdraw from
the agreement and take appropriate action or make final the agreement's
proposed Order.
Respondent Electronic Payment Systems, LLC is an independent sales
organization (``ISO'') that serves as an intermediary between merchants
seeking to open credit card merchant accounts and its acquiring bank,
which is the bank that has access to the credit card networks. John
Dorsey and Thomas McCann are officers and the owners of EPS.
The Commission's proposed Complaint alleges that, in 2012 and 2013,
EPS served as the ISO for the entities involved in a deceptive
telemarketing scam called Money Now Funding (``MNF'' or ``MNF scam'').
The FTC sued MNF in 2013 for telemarketing worthless business
opportunities to consumers and falsely promising that consumers would
earn thousands of dollars in income. The principals of the MNF scam
went to great lengths to hide their identities behind many phony
businesses. In order to charge consumers' credit cards but make it
difficult to trace the money back to MNF, MNF engaged in a credit card
laundering scheme whereby its principals and employees created numerous
fictitious companies. Those fictitious companies, through a sales
agent, submitted applications for merchant accounts to EPS. With
knowledge of the misconduct, EPS then opened merchant accounts in the
names
[[Page 17091]]
of these fictitious companies, and victim credit card charges were
processed through those accounts, rather than through a single merchant
account in the name of MNF. With similar knowledge, EPS engaged in the
underwriting and approval of MNF's fictitious companies and submitted
merchant account applications for these fictitious companies to its
acquirer. Using the services of two payment processors, EPS enabled
more than $4.6 million in MNF transactions to be processed through
these and other fraudulent merchant accounts.
The Commission's proposed Complaint alleges that EPS's conduct
regarding the MNF fictitious companies and their merchant accounts
constituted an unfair act or practice under Section 5 of the FTC Act
and assistance and facilitation of illegal credit card laundering under
Section 310.3(b) of the Telemarketing Sales Rule, 16 CFR 310.3(b); see
also Sec. 310.3(c) (banning credit card laundering).
The proposed Order contains provisions designed to prevent EPS from
engaging in the same or similar acts or practices in the future.
Section I of the proposed Order contains prohibitions against engaging
in credit card laundering; engaging in tactics to evade fraud
monitoring or risk monitoring programs; providing payment processing
services to any merchant that is engaged in any act or practice that
is, or is likely to be, deceptive or unfair; and providing payment
processing services to, or acting as an ISO for, any merchant that is
listed on the MasterCard Member Alert to Control High-Risk Merchants
(MATCH) list for several enumerated reasons.
Section II imposes screening requirements that EPS must implement
when it screens applications from prospective merchants that fall under
the definition of ``Additional Review Merchants.'' The definition of
Additional Review Merchant includes categories of EPS merchants that
have been the subject of FTC cases: Merchants who engage in outbound
telemarketing and merchants selling specific services (debt collection,
debt relief, credit-related services, rental housing listings, job
listings, or ``Money Making Opportunities,'' as defined in the order).
Heightened screening of Additional Review Merchants includes obtaining
detailed information about the merchant's business, as laid out in the
order. EPS would also be required to take reasonable steps to verify
the accuracy of the due diligence information it obtains.
Section III requires increased monitoring of Additional Review
Merchants. The order requires EPS to investigate merchants whose
chargeback rate exceeds 1% and whose total number of chargebacks
exceeds 55 per month in two of the preceding six months. Section IV
requires monitoring of sales agents and termination of sales agents who
are engaged in tactics to conceal credit card laundering.
Sections V through IX are reporting and compliance provisions that
allow the Commission to better monitor EPS's ongoing compliance with
the Order. Under Section IX, the Order will expire in twenty years,
with certain exceptions.
The purpose of this analysis is to aid public comment on the
proposed Order. It is not intended to constitute an official
interpretation of the Complaint or proposed Order, or to modify in any
way the proposed Order's terms.
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-06306 Filed 3-24-22; 8:45 am]
BILLING CODE 6750-01-P
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</html>Indexed from Federal Register on March 25, 2022.
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