On May 3, the Federal Trade Commission announced that it had executed a stipulated judgment with over a dozen entities that market and sell green coffee bean extract weight-loss supplements, male enhancement products, and skin care products, and their affiliated payment processors arising out FTC allegations of wrongdoing.  The allegations include that the defendants, among other things: (1) violated the Electronic Funds Transfer Act (EFTA) by debiting consumers’ bank accounts on a recurring basis without obtaining written authorization as required by the EFTA; (2) violated the Restore Online Shoppers Confidence Act (ROSCA) and Telemarketing Sales Rule (TSR) by charging consumers for goods or services sold in transactions effected on the Internet through a “negative option feature,” which is an offer or agreement to sell or provide goods or services, a provision under which the consumer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer; and (3) engaged in credit card factoring. 

Among other things, the settlement requires the defendants to pay $105 million in the aggregate$96 million of which will be suspended after the FTC collects $9 million in assets from the defendants.  Although it appears that the payment processor defendants were affiliated with the marketing and sales defendants through common ownership, the lawsuit and stipulated judgment remind payment processors that the regulators examine the acts and practices of payment processors in connection with merchants’ alleged violations of federal laws.