high risk merchant account
First Data & Ex-Executive Pays 40 million Dollars in Settlement
One of the globe’s largest payment processors, First Data Merchant Services and an ex-executive, will pay a fine worth a whopping $40.3 million to settle court charges.
First Data Merchant Services is a section of payment company Fiserv Inc. The latter bought the former as First Data Corp in a $29.3 billion deal in Jul 2019.
The Federal Trade Commission (FTC) had accused First Data of intentionally processing transactions and assisting fraudulent credit card payments in four schemes that ripped off many customers.
Three of the schemes were subjects of the supervisor’s earlier enforcement actions, while charge Number 4 was a matter of federal criminal prosecution.
Then on 12th May 2020, the supervisory body announced that the accused had agreed to pay settlements as follows;
First Data will pay up to $40 million, whereas the ex-executive Mr. Chi Ko (aka Vincent) will pay $270,374. The amount will refund the consumers ripped off in the four scams. A federal judge from Manhattan later approved the settlements.
According to the watchdog First Data “looked the other way time after time” between 2012 and 2014 while First Pay Solutions LLC, which Mr. Ko had created, set up accounts for the retailers involved in the rip-off scheme.
Mr. Ko set up fake accounts under made-up names, initiated payment processing via hundreds of firms, and issued wrong data to Wells Fargo & Co to create the accounts. Wells Fargo did not face any charges as it was found not to have been involved in the scam intentionally.
Also, to prevent such incidents in the future, the settlement deal mandated that First Data Merchant Services implements a thorough scrutiny process for high risk merchant account applicants.
Despite agreeing to pay FTC’s fine, neither First Data nor Mr. Ko accepted or denied the charges. However, Jim Walden, Mr. Ko’s official lawyer, maintained that his client was not aware that First Pay allowed several “rogue independent agents” to open accounts for fraudulent merchants.
First Data acquired all merchants accounts under First Pay and employed most of its workers in May 2015, and Ko as VP of strategic partnerships in Jan 2017. He no longer works at the company.
Fiserv later said that the decision to settle the charges as announced by FTC was “in the best interest of First Data, its clients, and their customers.”
Author Bio: Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of ecommerce and high risk merchant account. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie on his backyard porch, as should all right-thinking people.