The Federal Trade Commission announced today that it had agreed to settle charges against Capital Payments LLC (now known as Bluefin Payment Systems, LLC), for its alleged involvement with The Tax Club, a group of entities engaged in fraudulently telemarketing development services, including business formation, counseling, credit development, and marketing to individuals seeking to establish small businesses.
The FTC’s complaint charged Capital Payments with assisting and facilitating deceptive telemarketing acts in violation of the Telemarketing Sales Rule. The FTC alleged that in performing payment processing services for The Tax Club, Capital Payments ignored red flags, including high chargeback rates for credit card purchases, repeated reports from consumers of fraudulent charges, and alerts from financial institutions. Capital Payments ended its involvement in 2013 after the FTC and the states of Florida and New York brought lawsuits against The Tax Club.
Under the settlement, Capital Payments agreed to a $2.6 million judgment (partially suspended), with $750,000 to be paid by Bluefin. Under the settlement order, the company is prohibited from processing payments or acting as an independent sales organization in industries that pose a high risk of fraud, and Capital Payments may not assist or facilitate any merchant it knows, or should know, is violating the FTC Act or the TSR. Bluefin also must monitor its clients’ sales activity to detect and eliminate deceptive conduct.