CFPB Bans Payment Processor For Engaging In Fraudulent Practices

On January 18, the CFPB filed a proposed final judgment against an Illinois-based third-party payment processor and its founder (collectively, "defendants"), which ceased operations almost three years ago, settling claims that the defendants facilitated payments for telemarketing fraudsters targeting seniors.

As a third-party payment processor, the company processed over $70 million in remotely created check payments, which are created by a payee or service provider and drawn from a consumer's bank account. The checks were often authorized by the consumer via telephone or the internet and did not require handwritten signatures. The CFPB accused defendants of facilitating payment processing for client companies that used telemarketing schemes to trick seniors into purchasing expensive and unnecessary antivirus software and services, where such software and services could actually be accessed for free. The CFPB further found that the defendants harmed consumers by